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 :)
Yes.. it can reduce your tax liability if the mutual funds are long term capital assets. Check section 54F of income tax act
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?
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.
AFAIK, once you redeem, you are liable to pay tax even if you invest again, because you "realized" the gains.
Well, you are wrong on that front. Read up Sec 54F...
Thanks @Soufle
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.
You don't have to pay tax if your gains are less than 1L.
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
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