Exemption u/s. 54 to Self and Benefit of Housing Loan to Legal Hairs.

An exemption u/s 54 can be claimed on the amount of Long Term Capital Gain (LTCG) arising from the sale of the house property. For exemption, taxpayer has to invest the amount of LTCG for purchase or construction of another residential house property within a prescribed period. In your specific case, you have earned the amount of LTCG on sale of house property whereas the house property is sought be purchased in the name of your son so as to enable him to claim the income tax benefit on the housing loan to be availed for the balance amount (Rs. 9 Lacs).
To be precise, you want

• to claim exemption towards the entire amount of LTCG arising from the transfer of your first house property and
• to have the benefit on housing loan to your son as he will be having taxable income after your retirement and he will be repaying the amount of housing loan from his income.

For claiming an exemption u/s 54 in your hands AND future benefit of interest & principal repayment by your son, the new house property should be purchased in the joint ownership. The new house property should clearly incorporate the ownership ratio of the joint owners. Your share in the new house property should be more than the amount of LTCG and the share of your son should exceeds the amount of Housing loan sought to be availed by him and the housing loan should be recorded as his contribution in the house property.

Source: The Hitwada

Posted in: HRA Exemptions,Long Term Capital Gain