Can I repay home loan by adv money recvd from buyer of my flat on which I have taken home loan.?

Further I have also to buy a bigger flat by the sale proceed + new loan. Will I get long term capital gain benefit. The present flat is more than 36 months old.

4 Replies to “Can I repay home loan by adv money recvd from buyer of my flat on which I have taken home loan.?”

  1. Why not , there is no such problem in doing so. You may do it without any hesitation, but fact remains, you can not sell or transfer the property before clearing the loan amount.For buying bigger flat ,you may contact to some banker. I am not sure whether you will get capital gain or not, for which you will have to contact an income tax advocate, but you will definitely get interest exemption from you tax liabilities upto a certain limit.

  2. Yes you can utilise the advance received as repayment of loan.

    In fact if you have some more beyond that to close the loan, your purchaser can avail housing loan from his bank and that bank will settle the balance payment to close the balance loan and you will be given the remaining amount by that purchaser side bank.

    I doubt about the long term capital gain and you can check it up with a chartered accountant.

  3. Under section 54 of IT Act, 1961 if you invest LTCGs, from sale of residential house, in purchasing another residential house then the LTCGs are exempt from tax.


  4. If this is escrow money I wouldn’t spend this until the deal closes. What happens if the deal falls through? If you pay up your mortgage, then the deal falls apart, you may need to return the down payment. It’s best to hold the money and pay off existing loan out of the proceeds of the sale.

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