I have purchased the under-construction flat in 2014 and I received possession in Sept 2015. This flat is rented out and now I want to purchase a new flat for my own residency with the help of a home loan, currently, I am staying on rent in the same city. What is the tax if I sold my flat which was purchased in 2014 to pre-pay the home loan which I will be taking to purchase a new flat for my own residency?
Can I purchase a new flat with the help of a home loan and then sale my earlier flat to pre-pay the home loan? What is the tax liability?
Which one of the below is the best option:
1) Sale of existing flat and then purchase a new flat with the sold flat amount?
2) Purchase a new flat with the help of the home loan and then use the sale value of existing flat to pre-pay the home loan?
If you use the sales proceeds to repay home loan, then you have to pay the tax on the capital gain. However, if you use the same for repurchase, then you can save the tax.
Considering these options, it is you who has to decide which is best suitable to me. It is hard for me to guide anything blindly with mere few lines of sharing.
Thanks for your quick response.
I am planning to take a home loan and purchase a new home and parallelly sale the first house and use the sales proceeds to prepay home loan within 2 years. I think, within 2 years if the sales proceeds are used to purchase a new house then I can save tax on it. I am not sure this rule applicable to pre-pay home loan within 2 years?
Please clarify this
With reference to my original question which I asked here:
Today I read one article which says more about capital gains for the house and Home Loan. Can you please share your thoughts on this?
So as per article can I pre-pay my home loan using sales proceeds from my old home without any tax?
(I am assuming here the cost of my new home (or cost of my home loan) will be higher than the sale cost of my old home)
Awaiting a response.