Can I declare a capital good points exemption for the compensation of a house mortgage?

I’m shopping for a brand new home and shifting there. I need to promote my current home however am not capable of get a purchaser. I’ll take a house mortgage for the brand new residential home, and pay it off once I promote my current flat. Will I have the ability to get a capital good points exemption for cost of the house mortgage taken to purchase the brand new home?

In order to save lots of tax on long-term good points on the sale of a residential home property, it’s important to make investments the quantity of listed capital achieve both in one other residential home or in capital achieve bonds of specified monetary establishments. The funding in a residential home needs to be made inside two years from the date of sale of the property. Even in case you promote the residential home property inside one yr from the acquisition of one other residential home, you’ll be able to nonetheless declare capital good points exemption to the extent of listed capital good points or the worth of the home property purchased earlier which is decrease. If you get a home constructed or go for an under-construction property, the development needs to be accomplished inside three years. 

The bonds need to be purchased inside six months of the sale of the home. Please word that there isn’t any capital good points exemption in respect of compensation of a house mortgage taken to purchase a residential property besides to the extent accessible beneath Section 80C.

However, if you’ll be able to promote your current home property inside one yr from the date of buy of a brand new home, it is possible for you to to assert the exemption in respect of long-term capital good points arising on the sale of the current home. In case you aren’t capable of promote the current home inside one yr of the acquisition of this home, no capital good points exemption can be accessible with respect to the home property proposed to be purchased. 

However, you’ll be able to declare an exemption beneath Section 54EC by investing the listed long-term capital good points in capital good points bonds of specified monetary establishments inside six months from the date of sale of the prevailing flat. These bonds have a tenure of 5 years and curiosity obtained on these bonds is absolutely taxable. You can plan to repay the house mortgage after the completion of the five-year tenure of the bond.

Balwant Jain is a tax and funding professional who could be reached at jainbalwant@gmail.com and @jainbalwant his X deal with.

Catch all of the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint.
Download The Mint News App to get Daily Market Updates.

More
Less

Updated: 06 Sep 2023, 02:24 PM IST