sell property to repay home loan

Hello Experts,
I have a basic query. and need your help to clarify.
I have #3 home loans running
#1 Bought in 2010 (home load started in 2010)
#2 Bought in 2012 (home load started in 2012)
#3 is under construction flat (Booked in 2014, home loan started in 2015) - expected to be handed over by 2017 end.
Now, I wish to sell this flat when I get the possession and repay all the home loans (Flat + Houses).
My query is, can I use the left over money from sale of flat (after setting off it home loan) for loan payment of other houses? will it help me escape long/short term capital gain.
Thank more

Helpful Tax, Investments and Retirement Jul 17

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DEVINDER SHARMA

I understand that you intend selling your first residential house or apartment and use the money to pay off the loans for the other two residential properties and still minimize your capital gains tax without investing the capital gains for purchase of another residential house. It is understood that the house property being sold has been held by your for a period of three years and qualifies for long term capital gains. Your capital gains will be computed by indexing the cost of acquisition and improvement over the period the property was held. Given the period I do not think that you would make any significant long term capital gains as property during this period have appreciated more or less in line with the inflation index. Date of acquisition is normally treated as date of agreement for purchase where agreement gives your right to purchase the property. To avail of tax exemption only the Long term capital gains need to be invested in 3 years bond earning an interest of 5.25% per annum. Remaining amount can be used to pay off the loans for any of the properties. Please keep in mind that loan repayment is not considered for exemption from capital gains tax under Section 54 of the Income Tax Act. Therefore, repayment of loan for any of the properties has no bearing on tax planning for capital gains. more

Jul 18

Nitin SHARMA

Thanks a lot Sir, Just one clarification. in case I wish to sell of the latest (third) bought property and pay off loan of first two properties, in that case, do you think situation will change? in other words, How does selling the newly bought property (before taking possession; or within few months of possession) attract taxes? and what will be the implication if the amount is utilized to pay loans of older properties. Also what will be the scenario on the caoital gain computation if the circle rate of property is less than the real rate (lead deed) at which it is bought? Thanks for your answers. more

Jul 18

H.P. Gurg

You pay capital gain tax and then use the balance money to pay for home loan. more

Jul 18

Pammi Vishnumurty

Payments to State/ Central agencies like House tax, Electricity etc to be exempted for I-Tax. Retirement for Job. There should be Income retirement on FD interest being treated Income. more

Jul 17

Vijay Shah

While salling property make condition with buyer that I have to clear my home loan to get no due certificate before completing documentation so please pay that much amount as advance more

Jul 17

Chandan Pal

Please treat each property sale individually, calculate applicable Capital Gains, invest the sale money for the identified property and pre-close the loan. more

Jul 17

Nitin SHARMA

Thanks for the more 'reasonable' reply :-). For others, the time frame, no of properties etc.. are just indicative.. I wish they were true. But I wanted expert opinion on this qn that came to my mind.. more

Jul 18

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