Financial Daily from THE HINDU group of publications
Sunday, Dec 01, 2002

Investment World
Port Info

Group Sites

Investment World - Income Tax
Industry & Economy - Income Tax
Columns - Tax Talk

Exemption on sale of house

T. Banusekar

I PROPOSE to sell my house, which was constructed by getting a loan from a financial institution. Out of the sale proceeds, I propose to pay back Rs 2 lakh. Can a tax exemption be claimed in respect of his repayment of housing loan? If I invest the entire amount in another house can I claim an exemption?



No tax benefit can be derived by way of exemption or deduction on repayment of the principal outstanding to financial institution in respect of a loan taken for the purpose of construction of a house property except to the extent of claiming the rebate under Section 88 in respect of the principal repayment of housing loan. This rebate will be available at 20 per cent of the principal repaid subject to a maximum rebate of Rs 4,000. The rebate, however, is not available in respect of persons whose gross total income is more than Rs 5 lakh and is subject to certain limits. On sale of a house property and investment in another, an exemption will be available under Section 54 subject to the following:

  • The assessee is an individual or HUF.

  • The asset transferred is a long-term capital asset.

  • The asset transferred is a residential house.

  • An investment is made in another house property by purchase or construction.

  • If the investment is to be made by way of purchase, it should be one year before or two years after the date of transfer of the original capital asset.

    If the investment is to be made by way of construction, the same should be completed within three years from the date of transfer of the original asset. If these conditions are satisfied, an exemption is available to the extent of:

  • If the amount invested is more than or equal to the capital gains, the whole of the capital gain.

  • If the amount invested is less, to the extent invested. The reader can, therefore, claim the exemption in respect of investment in another house property provided he satisfies the conditions stated above.

    Send this article to Friends by E-Mail
    Comment on this article to

  • Stories in this Section
    BSL open offer: Accept

    No demat account closing charge
    What is loss aversion?
    `Overseas markets will account for 30% turnover in 2 years'
    Pharmaceuticals — Health is not necessarily wealth
    Generics and contra-indications
    Charge your mobile
    Taj-Delta SkyMiles
    Concessional air fares too go up
    More flying options
    Automobile industry: Vrooming ahead
    How many funds make one diversified?
    Three is good company

    It's returns that count
    A question of choice
    L'affaire Grasim-L&T: Losers all
    Growing reserves and uncertainty
    Grasim's missed calculations
    The Alliance'95 Fund: Sell
    G-Sec funds: SEBI's new checks and balances
    Zurich India Capital Builder Fund: Switch
    Franklin India Infotech Fund: Sell
    Alliance Frontline Equity: Hold
    Towards regulated selling
    Wipro: Cut exposure
    Gujarat Ambuja: Pare Exposures
    Goodlass Nerolac: Hold/Buy on declines
    Escorts: Hold
    West Coast Paper: Hold
    Tata Chemicals: Buy
    Term assurance policy: A plain cover
    Computation of bonuses
    HLL may seek higher levels
    Short-term uptrend in Tata Tea
    Nasdaq: Downward correction likely
    Growth in car sales jacks up Tata Engg
    Bonds carry downward bias
    Positive week for HPCL
    Contract size and corporate actions
    Options guide
    Futures guide
    HDFC: Well-covered
    Bharat Overseas Bank's floating rate scheme
    Capital gains tax — Time limits for saving tax
    Exemption on sale of house
    HSBC Income Plan: Unattractive
    HSBC Equity Fund: Unattractive
    It Adds Up!

    The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
    Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |

    Copyright 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line