SqueakyHamster
SqueakyHamster

Tax advice

I recently bought a home by selling some mutual funds + bank loan.

I still have some mutual funds left and I was wondering if I could reduce my tax liability on capital gains by selling and re buying mutual funds.

Anyone who has done this? Or anyone who has a good CA who can advise on tax consultation?

Thanks in advance :)

12mo ago
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ZestyWaffle
ZestyWaffle

Yes.. it can reduce your tax liability if the mutual funds are long term capital assets. Check section 54F of income tax act

SqueakyHamster
SqueakyHamster

Thank you for responding. So I am thinking about liquidating all the long term capital gains mutual funds and show it under 54F to offset my capital gains against house purchase and re-buy mutual funds. Basically use house purchase as an opportunity to offset LTCG. Any idea if that can be done?

ZestyWaffle
ZestyWaffle

This is completely fine and legal way of tax planning. Additionally you can claim deduction of interest paid on housing loan up to Rs. 2 lakhs u/s 24 and 1.5 lakhs of principal repayment u/s 80C.

SwirlySushi
SwirlySushi

AFAIK, once you redeem, you are liable to pay tax even if you invest again, because you "realized" the gains.

CosmicNarwhal
CosmicNarwhal

Well, you are wrong on that front. Read up Sec 54F...

SwirlySushi
SwirlySushi

Thanks @Soufle

ZoomyMuffin
ZoomyMuffin

If you use the LT Capital Gains to invest in a house within the next 1yr of selling, you do not have to pay Cap gains tax. I think there are conditions of the house like residential and first house etc.

QuirkyNarwhal
QuirkyNarwhal

You don't have to pay tax if your gains are less than 1L.

JazzyBurrito
JazzyBurrito

Selling and buying mutual funds doesn’t help in reducing capital gains. Need to know your tax bracket for further planning. Dm on 7990744040 or connect on LinkedIn - Abhishek Viramgami

TwirlyJellybean
TwirlyJellybean

Only if your portfolio is in loss. Sell and buy back so you can offset gains with loss and is allowed only till 1lac

SillyDonut
SillyDonut
TCS12mo

U can consult him, telegram vedanta20

SparklyBurrito
SparklyBurrito
  1. 54F to save capital gains only if the gain amount is huge
  2. You can claim deduction under 80C on the stamp duty paid on the house.
  3. No tax to be paid upto 1 Lakh LTCG.
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