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Hindustan Times (Chandigarh) - Estates - - ESTATES - Harsh Roongta is a SEBI reg­is­tered in­vest­ment ad­viser. He can be con­tacted on HARSH ROONGTA

I pur­chased a flat in Ghazi­abad, Ut­tar Pradesh, in 2011 for which I took a home loan. I have booked an­other flat in Ghazi­abad which is yet to be reg­is­tered. I hope to get pos­ses­sion of the sec­ond flat by March 2017. I am plan­ning to take a home loan on the sec­ond house too. Once I shift to the new flat, I plan to sell off my old flat. Can I use cap­i­tal gains from the first house to pre­pay my home loan that I in­tend to take for the sec­ond house?

- Swati Jain The cap­i­tal gain on your ex­ist­ing Ghazi­abad flat will be cal­cu­lated on the sale price mi­nus the in­dexed cost of ac­qui­si­tion. As­sum­ing the ex­ist­ing house in Ghazi­abad that was bought any time af­ter April 1, 2011, the in­dexed cost will be 1.43 times the orig­i­nal cost (i.e in­dex value of 1125 for fi­nan­cial year 2016-17 di­vided by in­dex value of 785 in fi­nan­cial year 2011-12). Let’s as­sume that the pur­chase date of the new Ghazi­abad flat is within one year be­fore the date of sale of the ex­ist­ing Ghazi­abad flat. If so, then if the cost in­curred on pur­chas­ing the new Ghazi­abad flat is higher than or equal to the cap­i­tal gain as cal­cu­lated above, it will not mat­ter whether you use the sales pro­ceeds of the old flat to pay the builder or to pay off the home loan.

In ei­ther case, you should be able to claim ex­emp­tion on the cap­i­tal gains I have cho­sen to buy a flat in a city in Ma­ha­rash­tra and have paid 20% of pur­chase value to the builder. The deal amount is de­cided and agreed. The flat will be ready for pos­ses­sion in June-2017. The builder has asked me to reg­is­ter the agree­ment any date be­fore pos­ses­sion. Con­sid­er­ing the GST com­ing into force in April next year, which would be the best pe­riod do you think (be­fore or af­ter GST com­ing into force) to reg­is­ter an agree­ment? I want to save on pay­ing ser­vice taxes. - Pankaj Mathur The ex­act reg­u­la­tions or even the tax rates of GST or the date of its im­ple­men­ta­tion are still far from clear so it is not pos­si­ble to an­swer your ques­tion with cer­tainty. But it is very un­likely that GST rate will lead to any sav­ings over ser­vice tax rates.

In any case leav­ing a prop­erty un­reg­is­tered is ex­tremely risky as far as your ti­tle to the prop­erty is con­cerned. You should be much more con­cerned about the safety of your ba­sic in­vest­ment rather than try­ing to save on taxes (which in any case is not likely in this case). So, from all ac­counts I would ad­vise you that it is much bet­ter for you to reg­is­ter the prop­erty im­me­di­ately. I’m plan­ning to buy a house in my wife’s name. She is a housewife with no source of in­come. How will the Be­nami Prop­erty Amend­ment Act af­fect my pur­chase trans­ac­tion and af­ter-pur­chase trans­ac­tions?

- Rakesh Sharma The Be­nami Trans­ac­tion (Pro­hi­bi­tion) Amend­ment Act does not af­fect prop­erty bought in the name of the spouse. This ap­plies as long as the con­sid­er­a­tion for such prop­erty has been paid out of the known source of such an in­di­vid­ual.

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