I Wanted to about capital gain. My history as under
a. I purchased 1st propery on 13/04/2000 @ RS. Three Lack
b. i purchased 2nd prperty on 6/12/2004 @ Rs.5 Lack.
c. I Sold 2nd property on 15 lak on 29/07/2009

Now i want purchas new propery @ rs 20 lkah with additional loan of some bank (used money of 2nd property + new loas)

if I purchased 20 lakh new property on same year & next year i want sale my 1st propery and repayment of loan amount new property 20 lakh.

it is allow to pay repayment of home loan ? OR paid capital gain of 1st property?
Regards
Pradeep

Dear Mr. Pradeep,

The gains of Rs. 10 lacs on sale of II property will become taxable as long term gains after indexation benefits.

You can however escape tax totally, if you invest the entire gains (100%) on another property.

Yes, you can sell the first property whenever you choose. Again that will also invite capital gains tax subject to benefits being available (upto 31.3.2011) under Section 54.

No one can prevent you from repaying the homeloan taken for any property. You may be called upon to pay some amount towards pre closure of the loan account.

Dear Pradeep, Here is the Tax calc. for u -

2nd property -
A. Purchase price = 5L
B. Purchase Financial year = 2004-2005
C. Cost inflation index of 2004-05 = 480
D. Sell Financial year = 2009-2010
E. CII of 2009-2010 = 632
F. Indexed Purchase price = 5*632/480 = 6.58L
G. Sell price = 15L
H. Indexed Long term capital gain = 15 - 6.58 = 8.42L

Now if u purchase a ready built property within next 2 year from the date of sell of ur 2nd property (till 28/07/2011) or construct a house within next 3years (till 28/07/2012) & use 8.42L Capital gain amount to invest in this new property u can save ur full LTCG Tax liability.

Now in context of ur full post or should i say next part of ur post that u intend to sell ur 1st property also, a tricky situation may arise - If u sell ur 1st property after purchasing ur 3rd property but within 1 year, u may partially adjust ur LTCG of 1st property against the purchase of this 3rd property.

It`s upto u how u use the situation to the max. for ur favor.

thanks

Ashal