In December 2018, I purchased a residential dwelling with the help of a home loan. For all of these years, I have taken advantage of the tax breaks provided by Sections 80C and 24 of the Income-tax Act of 1961. Now, I want to sell this house in March 2023 and pay off the mortgage. What are the tax consequences if I pay off my mortgage in full in March 2023?
It should be noted that there are no equivalent mechanisms for reversing tax benefits obtained about interest under Section 24. (b). As a result, if you sell your home in March 2023, any income tax benefits obtained in the past for principal repayment would be considered as income for this year.
As a result, I would encourage you to finish the full five fiscal years from the end of the year in which possession was taken to avoid the implications of the reversal of tax benefits already obtained.
Since you are selling the house after owning it for more than 24 months, any profits gained on the sale will be classified as long-term capital gains (LTCG), and you may be required to pay tax on the difference between the indexed cost and the sale price. Please keep in mind that if you pay back your house loan, it does not affect your tax due; nevertheless, the same may be claimed under Section 80C up to Rs. 1.50 lakh together with other qualified goods.
Question: I earn Rs. 6.5 lakh per year and need to pay Rs. 2.5 lakh to my farming family. Can I use this as a tax deduction?
Answer: What you are doing is using your earned money rather than the cost spent to generate this cash. There are no tax breaks available for this type of income application. This is regarded as a present to your family members. If the family members are designated relations as defined in Section 56(2) of the Income-tax Act, 1961, there would be no tax implications for them; otherwise, the sum will be considered as their income if the total of all gifts received by them individually reaches Rs. 50,000 in a year.
Can a senior person deduct savings bank interest under Section 80TTA and bank FD interest and accumulated National Savings Certificate (NSC) interest under Section 80TTB?
Answer: A resident senior citizen can deduct interest income from banks/post offices and credit cooperative banks up to Rs. 50,000 per year, whether it is from a recurring deposit or savings bank, under Section 80TTB. There is no deduction for NSC interest. It is not possible to claim a deduction under Sections 80TTA and 80TTB at the same time.
The author is a specialist in taxation and investing.