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If you are selling a house taken on home loan, then what will be the tax liability, also know how to save

Rules for getting tax exemption on home loan

Rohit bought a 2 bedroom flat in Mumbai in December 2018 by taking a home loan from HDFC Bank. Along with buying the flat, Rohit has been taking advantage of tax exemption on it. They claim tax on the principal and interest of the loan. Now Rohit’s family is slowly growing and a two-bedroom flat is getting smaller for him. Rohit is thinking that by selling this old flat, take a three room flat. But a question is constantly swirling in his mind. The question is about tax liability.

Rohit thinks that he has taken flat on home loan. What will be the tax liability if you sell the home loan flat and buy another flat. Rohit thinks to himself that if he sells the old two room flat, then the benefit of tax exemption that he is availing since December 2018 will have to be returned. And only after this return will they be able to buy a three room flat? It is a valid question that many people face. Actually, the matter of tax is such that good people get into thinking. In the end, they have to go to the shelter of a tax expert where they are told about the remedies.

understand in simple language

Poor Rohit is also suffering from this problem, so he rushes to a tax expert. Let us know what information tax experts give them.

The first thing in this information is about Section 80C of Income Tax. This is such a section that tells the treatment of almost every merge. Same thing here too, but Rohit gets little annoyance here, not relief. As per section 80C of the Income Tax Act, if you sell a house purchased with a home loan, within five years from the end of the year in which it was purchased, any tax benefit under 80C on repayment of the loan Was it, all that would become taxable. You will have to add all this tax and pay it in the same year in which the house taken from the home loan is repaid.

Will the tax money have to be returned?

In such a situation, if Rohit has claimed tax on the repayment money under 80C, then the tax will have to be paid on the same in the year of selling the flat. No tax exemption will be available on the repayment amount. However, it is to be noted here that this tax will be taxed on the same amount that has been paid as the principal amount of the loan. This rule of tax liability does not apply if the interest on the home loan has been paid. Therefore, if you have availed tax benefit under section 24(b) on the interest of the house taken from the home loan, then it will not be taxable and will be exempted from tax.

When will tax not be charged

Since Rohit is selling the flat after completing 24 months, the profit earned on it will be treated as long term capital gain. As per section 54 of the Income Tax Act, one can avail tax exemption on long term capital gains on sale of a residential house only if another house or flat is purchased within a specified period of time with the money from that capital gain. If Rohit’s new house or flat is worth Rs. Keep in mind that Rohit will get this benefit only if he buys a new flat within three years of selling the old flat.

Read also: You can save tax on the purchase of expensive petrol and diesel, know the exact way to claim it


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