| Question And Answer | |
|---|---|
| Subject: | Section 54F Exemption , second house ? |
| Category: | Income-Tax |
| Querist: | Ravi aiftp |
| Answered by: | Chartered Accountant ., Mr . H. N. Motiwalla |
| Tags: | Investment in second house |
| Date: | January 16, 2024 |
An individual purchased a second house property in December 2018 for a total consideration of Rs. 1.15 crores The individual borrowed a home loan from a nationalized bank to the extent of Rs. 1.20 crores. The individual received the possession of the house in April 2020 and he started occupying the house from June, 2020
In December 2020, the individual sold the shares of a private limited company for a total consideration of Rs. 2 crores. (cost of acquiring the shares was negligible and shares were held since 2014). Out of the money received from sale of shares, the individual repaid the entire home loan of Rs. 1. 20 crores in January 2021.
Can the individual claim exemption u/s. 54F from long term capital gains arising on sale of shares against repayment of home loan?
S. 54F grants relief from tax on capital gains in respect of any long term capital assets other than residential house. S. 54 and 54F are in Pari-materia. The common condition under both the provisions it that the assessee must purchase or construct a residential house before or after the transfer of the asset which yield capital gains.
In this case, the assessee sold the share of private limited company and repaid the entire home loan of Rs 1.20 crores, which he had taken for purchase of house instead of purchasing or constructing house. Hence he is not entitled to claim exemption u/s 54F of the Act.
Source: AIFTP Journal November 23