Home > Money > Question
Need Expert Advice?Our Gurus Can Help

Can I use gains from selling old flat to pay off loan on new one, avoid tax?

Mihir

Mihir Tanna  |998 Answers  |Ask -

Tax Expert - Answered on Jan 20, 2025

Mihir Ashok Tanna, who works with a well-known chartered accountancy firm in Mumbai, has more than 15 years of experience in direct taxation.
He handles various kinds of matters related to direct tax such as PAN/ TAN application; compliance including ITR, TDS return filing; issuance/ filing of statutory forms like Form 15CB, Form 61A, etc; application u/s 10(46); application for condonation of delay; application for lower/ nil TDS certificate; transfer pricing and study report; advisory/ opinion on direct tax matters; handling various income-tax notices; compounding application on show cause for TDS default; verification of books for TDS/ TCS/ equalisation levy compliance; application for pending income-tax demand and refund; charitable trust taxation and compliance; income-tax scrutiny and CIT(A) for all types of taxpayers including individuals, firms, LLPs, corporates, trusts, non-resident individuals and companies.
He regularly represents clients before the income tax authorities including the commissioner of income tax (appeal).... more
Ajit Question by Ajit on Jan 19, 2025Hindi
Listen
Money

I have purchased a flat in 2010 for Rs25,00,000 and have received possession in December 2024. I have purchased another flat in 2012 for 90,00,000 but didn't get the possession yet. Have availed bank loan and 90% of the payment was done by 2015. Now can I sell my earlier flat and use the capital gains to pay the home loan of the second flat. Will it be exempt from Long Term Capital gains tax?

Ans: No, capital gain will not be exempt as gain amount is not likely to be invested in another property post sell of earlier flat
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
Money

You may like to see similar questions and answers below

Latest Questions
Moneywize

Moneywize   |178 Answers  |Ask -

Financial Planner - Answered on Feb 06, 2025

Asked by Anonymous - Feb 06, 2025Hindi
Listen
Money
I am 34, earning 15 LPA planning to retire at the age of 45. I want to invest 20 lakhs lump sum to generate corpus of 7 cr. Where and how should I invest?
Ans: To generate a corpus of Rs 7 crore by the time you are 45, starting with a Rs 20 lakh lump sum investment at 34, you need to consider the power of compounding, high-return investments, and disciplined portfolio management. Here's how you can structure your investments:
Key Assumptions:
1. Time Frame: 11 years (from age 34 to 45).
2. Required Corpus: Rs 7 crore.
3. Initial Investment: Rs 20 lakh.
To grow Rs 20 lakh to Rs 7 crore, the required annual return would be approximately 24% compounded annually. Achieving such high returns involves a significant degree of risk, so it's important to balance the portfolio carefully.
Investment Strategy:
1. Equity Mutual Funds (High Risk, High Return):
• Equity is the primary asset class to generate high returns over the long term. Historically, equity mutual funds can provide returns of around 12-18% annually, but this is subject to market performance.
• Suggested Funds:
o Large-cap funds: For stability and steady growth (e.g., HDFC Top 100 Fund, Mirae Asset Large Cap Fund).
o Mid-cap and Small-cap funds: Higher growth potential but more volatile (e.g., Axis Midcap Fund, Nippon India Small Cap Fund, Motilal Oswal Midcap Fund).
o Flexi-cap funds: These provide exposure to both large and mid-cap stocks (e.g., Parag Parikh Flexi Cap Fund, HDFC Flexi Cap Fund).
• Allocation for Equity Funds: Around 70-80% of your lump sum (Rs 14 lakh - Rs 16 lakh) can be invested in equity funds, targeting high growth.
2. SIP Investments (For Dollar-Cost Averaging):
• While you have a lump sum, consider continuing SIPs in equity funds over the years to help with dollar-cost averaging (DCA), which reduces the risk of investing a lump sum at market highs.
• Start SIPs of Rs 30,000-Rs 40,000 per month, targeting high-growth equity funds to further compound your wealth.
3. Hybrid Funds (Moderate Risk):
• To balance the portfolio, invest in hybrid funds, which include a mix of equity and debt. They can moderate volatility and provide steady growth.
• Suggested Funds: HDFC Hybrid Equity Fund, ICICI Prudential Balanced Advantage Fund.
• Allocation for Hybrid Funds: Around 10-15% (Rs 2 lakh - Rs 3 lakh).
4. Real Estate (Optional):
• If you have any plans of investing in real estate, a portion of your portfolio can be used here. Though real estate generally appreciates at a slower rate, it can be a good long-term investment. However, avoid allocating too much to it since real estate is illiquid.
• Allocation for Real Estate: Optional, but around 5-10% of the lump sum (Rs 1-2 lakh).
5. Debt Instruments (Low Risk, Capital Protection):
• While the primary focus should be on high-return equity, it's prudent to keep a small portion in debt funds or bonds for stability.
• Suggested Funds: HDFC Corporate Bond Fund, ICICI Prudential Liquid Fund.
• Allocation for Debt Instruments: Around 5% (Rs 1 lakh).
Expected Returns:
1. Equity Funds: Targeting returns of 15-20% annually.
2. Hybrid Funds: Targeting returns of around 10-12% annually.
3. Debt Funds: Targeting returns of 6-7% annually.
Tracking and Adjusting:
1. Monitor Portfolio: Review the portfolio every 6-12 months to ensure the investments are aligned with your goal. Consider reallocating based on market conditions.
2. Tax Considerations: Ensure tax efficiency by investing in tax-efficient funds and making use of tax exemptions (e.g., ELSS for tax saving under 80C).
3. Rebalancing: As your investment grows, shift gradually from high-risk assets (equity) to lower-risk assets (debt/hybrid) as you approach the target.
Potential Outcome:
Assuming you achieve the required return of 24% annually (through a combination of equities, SIPs, and compounding), your Rs 20 lakh investment can grow significantly by 45. However, the exact growth rate will depend on market performance, the consistency of returns, and your disciplined investment approach.
Conclusion:
Achieving a Rs 7 crore corpus from Rs 20 lakh in 11 years is ambitious but possible with a high-risk, high-return strategy. By focusing on equity mutual funds, balancing with hybrid and debt funds, and continuing SIPs, you can potentially achieve your goal. However, monitor the portfolio periodically and adjust your strategy based on market conditions and risk tolerance.

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x