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New Apartment Buyer: Can I Claim Section 54F Tax Benefit?

Samkit

Samkit Maniar  |174 Answers  |Ask -

Tax Expert - Answered on Jul 24, 2024

CA Samkit Maniar has eight years of experience in income tax, mergers and acquisitions and estate planning.
He has graduated from Mumbai’s N M College of Commerce and Economics and has completed his CA from The Institute of Chartered Accountants of India."... more
DEBASHISH Question by DEBASHISH on Jul 22, 2024Hindi
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Sub: Section 54F tax benefit for under construction apartment . Hello sir, Could you help to understand, If below scenario is valid to get tax benefit. Please read all below four points before answering questions. Point1: Sale agreement date of apartment = Jan 2023. Point2: 60 percent of apartment cost(with self + home loan) paid to builder till now (July 2024). Point3: I sold stocks(Sept 2024) and invested LTGC to finance remaining 40 percent of apartment cost through instalments (before this FY Mar 2024). Point4: Expected possession date of apartment = Oct 2025 (Actual home registration date). Question1. Am I eligible to claim this LTCG tax benefit under section 54F ? Question2. If I am eligible for LTCG tax benefit , Do we need to put LTGC amount in capital gain account till possession of property? Or capital gain account is not needed , as LTGC amount is already invested to finance the remaining 40 percent of apartment cost in this FY24 -25 ? Question3: If I am eligible for LTCG tax benefit , Can I use LTCG amount for prepayment of home loan in this FY24 -25 and get Section 54F tax benefit ?

Ans: Hi Debashish, I have already answered your query. Please feel free to reach out to me incase you need any further assistance.
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.
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T S Khurana

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Hello, Could you help me to understand, If below scenario is valid to get tax benefit. Please read all below four points before answering questions. Point1: Sale agreement date of apartment = Jan 2023. Point2: 60 percent of apartment cost(with self + home loan) paid to builder till now (July 2024). Point3: Suppose, I sold stocks(Sept 2024) and invested LTGC to finance remaining 40 percent of apartment cost through instalments (before this FY end Mar 2025). Point4: Expected possession date of apartment = Oct 2025 (Actual home registration date). Question1. Am I eligible to claim this LTCG tax benefit under section 54F in above scenario for FY24 -25? Question2. If I am eligible for LTCG tax benefit , Do we need to put LTGC amount in capital gain account till possession of property? Or capital gain account is not needed , as LTGC amount is already invested to finance the remaining 40 percent of apartment cost in this FY24 -25 ? Question3: If I am eligible for LTCG tax benefit , Can I use LTCG amount for prepayment of home loan in this FY24 -25 and get Section 54F tax benefit ? Questions4: If only option remain is to save in capital gain account for tax benefit in FY24 -25. I really want to avoid to save LTCG in capital gain account. In this case, Suppose, I sold stocks(After current FY e.g. Apr 2025) and use LTCG amount for prepayment of home loan. Can I get tax benefit in this case for F**Y25 -26(**Assuming possession date of apartment = Oct 2025)
Ans: Q.No.1. You are eligible for LTCG exemption u/s 54-F during F/Y 2024-25.
Q.No.2. You are not required to keep this amount in Capital Gain Account & you may pay directly 40% cost of apartment to the builder.
Q.No.03. You may use this amount for Repayment/Prepayment of Housing Loan also, but please ensure that payment to the builder, during one year before sale of stocks, should not be less than Capital gain on stocks.
Q.No.04(a). You may not keep your money in Capital Gain Account & instead pay to the builder directly.
Q.No.04(b). In case you sell your stocks in f/y 2025.26, you can still avail the Tax Benefit in F/Y 2025-26.
Hope it takes care of your quarries. Most welcome for any further details. Thanks.

..Read more

Samkit

Samkit Maniar  |174 Answers  |Ask -

Tax Expert - Answered on Jul 24, 2024

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Hi Sir, Could you help me to understand, If below scenario is valid to get tax benefit. Please read all below four points before answering questions. Point1: Sale agreement date of apartment = Jan 2023. Point2: 60 percent of apartment cost(with self + home loan) paid to builder till now (July 2024). Point3: Suppose, I sold stocks(Sept 2024) and invested LTGC to finance remaining 40 percent of apartment cost through instalments (before this FY end Mar 2025). Point4: Expected possession date of apartment = Oct 2025 (Actual home registration date). Question1. Am I eligible to claim this LTCG tax benefit under section 54F in above scenario for FY24 -25? Question2. If I am eligible for LTCG tax benefit , Do we need to put LTGC amount in capital gain account till possession of property? Or capital gain account is not needed , as LTGC amount is already invested to finance the remaining 40 percent of apartment cost in this FY24 -25 ? Question3: If I am eligible for LTCG tax benefit , Can I use LTCG amount for prepayment of home loan in this FY24 -25 and get Section 54F tax benefit ? Questions4: If only option remain is to save in capital gain account for tax benefit in FY24 -25. I really want to avoid to save LTCG in capital gain account. In this case, Suppose, I sold stocks(After current FY e.g. Apr 2025) and use LTCG amount for prepayment of home loan. Can I get tax benefit in this case for F**Y25 -26(**Assuming possession date of apartment = Oct 2025)
Ans: At the outset let me highlight that LTCG and house property are contentious issues.

As far as eligibility of section LTCG benefit is concerned, it is available for purchase of house 1 year prior to transfer of long term assets (i.e. stocks and shares in this case) or 2 years after the transfer of long term assets. Assumingly, you sold the shares in September 2024 then ideally you can utilize the entire proceeds for purchasing the house property from September 2023 till September 2026. However, the property is registered as on January 2023, hence it may be difficult for you to claim the LTCG exemption.

Accordingly, post payment of 10% taxation over gains, you can prepay your home loan.

Please consult your CA before moving ahead.

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T S Khurana

T S Khurana   |304 Answers  |Ask -

Tax Expert - Answered on Aug 16, 2024

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Hi Mahesh, Could you help me to understand, If below scenario is valid to get tax benefit. Please read all below four points before answering questions. Point1: Sale agreement date of apartment = Jan 2023. Point2: 60 percent of apartment cost(with self + home loan) paid to builder till now (July 2024). Point3: Suppose, I sold stocks(Sept 2024) and invested LTGC to finance remaining 40 percent of apartment cost through instalments (before this FY end Mar 2025). Point4: Expected possession date of apartment = Oct 2025 (Actual home registration date). Question1. Am I eligible to claim this LTCG tax benefit under section 54F in above scenario for FY24 -25? Question2. If I am eligible for LTCG tax benefit , Do we need to put LTGC amount in capital gain account till possession of property? Or capital gain account is not needed , as LTGC amount is already invested to finance the remaining 40 percent of apartment cost in this FY24 -25 ? Question3: If I am eligible for LTCG tax benefit , Can I use LTCG amount for prepayment of home loan in this FY24 -25 and get Section 54F tax benefit ? Questions4: If only option remain is to save in capital gain account for tax benefit in FY24 -25. I really want to avoid to save LTCG in capital gain account. In this case, Suppose, I sold stocks(After current FY e.g. Apr 2025) and use LTCG amount for prepayment of home loan. Can I get tax benefit in this case for F**Y25 -26(**Assuming possession date of apartment = Oct 2025)
Ans: Q.No.1. You are eligible for LTCG exemption u/s 54-F during F/Y 2024-25.
Q.No.2. You are not required to keep this amount in Capital Gain Account & you may pay directly 40% cost of apartment to the builder.
Q.No.03. You may use this amount for Repayment/Prepayment of Housing Loan also, but please ensure that payment to the builder, during one year before sale of stocks, should not be less than Capital gain on stocks.
Q.No.04(a). You may not keep your money in Capital Gain Account & instead pay to the builder directly.
Q.No.04(b). In case you sell your stocks in f/y 2025.26, you can still avail the Tax Benefit in F/Y 2025-26.
Hope it takes care of your quarries. Most welcome for any further details. Thanks.
NOTE : This question has already been replied earlier also.

..Read more

Mihir

Mihir Tanna  |990 Answers  |Ask -

Tax Expert - Answered on Jul 31, 2024

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Hi Tejas, Could you help me to understand, If below scenario is valid to get tax benefit. Please read all below four points before answering questions. Point1: Sale agreement date of apartment = Jan 2023. Point2: 60 percent of apartment cost(with self + home loan) paid to builder till now (July 2024). Point3: Suppose, I sold stocks(Sept 2024) and invested LTGC to finance remaining 40 percent of apartment cost through instalments (before this FY end Mar 2025). Point4: Expected possession date of apartment = Oct 2025 (Actual home registration date). Question1. Am I eligible to claim this LTCG tax benefit under section 54F in above scenario for FY24 -25? Question2. If I am eligible for LTCG tax benefit , Do we need to put LTGC amount in capital gain account till possession of property? Or capital gain account is not needed , as LTGC amount is already invested to finance the remaining 40 percent of apartment cost in this FY24 -25 ? Question3: If I am eligible for LTCG tax benefit , Can I use LTCG amount for prepayment of home loan in this FY24 -25 and get Section 54F tax benefit ? Questions4: If only option remain is to save in capital gain account for tax benefit in FY24 -25. I really want to avoid to save LTCG in capital gain account. In this case, Suppose, I sold stocks(After current FY e.g. Apr 2025) and use LTCG amount for prepayment of home loan. Can I get tax benefit in this case for F**Y25 -26(**Assuming possession date of apartment = Oct 2025)
Ans: Considering complexity in query, it would be better if you meet tax consultant and discuss the facts face to face.

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