I am shifting cities and plan to sell my house in Bangalore on which a home loan is running for the past four years. I am also claiming tax deductions under Section 80C on this loan, which is for a self-occupied property. What will happen if I sell my property within five years?
Rajjiv Nair, Bangalore
You are in a tough spot. While, you must have claimed tax deductions under Section 80C towards the repayment of the principal amount of housing loan up to Rs 1.50 lakh. However, this benefit is possible as long as you hold on to this property for more than five years at least. According to the income tax laws, in case you do sell a house on which you are claiming tax deductions on the loan repayment before completion of five financial years, the deductions claimed in the years up to sale will be deemed to be the income of the financial year in which such property is sold. If you have been servicing the home loan for the past four years, you could as well wait for one more year before considering this sale to reduce your tax outgo.
