Archive · 21 Aug 2026
Tax Rules Cover Home Construction, Loans and Mutual Fund Gifts
The article answers three common income-tax questions.
If someone sells a flat and wants a tax exemption, they can buy land for a new home.
However, the home must be built within three years of selling the flat.
Waiting five years would not meet the exemption rule.
Unused money may be placed in the Capital Gains Account Scheme, but this does not add more time.
A couple with a joint home loan may each claim an interest deduction if they jointly own the property and share the loan interest.
Giving mutual fund units to a brother is not taxed as a sale.
Tax is considered later when the brother sells the units, using the original owner’s cost and holding period.
A plot bought with residential-flat sale proceeds qualifies for reinvestment only if a house is constructed within three years of the flat’s transfer.
Depositing unused capital gains in the Capital Gains Account Scheme does not extend the three-year construction deadline.
Joint home-loan borrowers may each claim up to Rs 2 lakh in interest deductions if they are co-owners and bear corresponding interest.
A gift of mutual fund units to a brother does not trigger capital gains tax at the time of transfer.
The recipient’s future capital gain is calculated using the donor’s original cost and holding period.
- Who
- Taxpayers asking about capital gains, joint home-loan interest and mutual fund gifts, including Atul Kapoor, Prabhakar Rao and Ajit Puri.
- What
- The article explains tax treatment for reinvesting residential-flat sale proceeds, claiming home-loan interest deductions and gifting mutual fund units to a brother.
- When
- A new residential house must be constructed within three years of transferring the original flat; the other tax consequences arise when interest is paid or gifted units are later sold.
- Where
- The first question concerns a flat in Jaipur and a proposed plot in the taxpayer’s hometown.
- Why
- The guidance explains how taxpayers can meet capital-gains exemption conditions and claim or defer tax treatment correctly.
- House construction deadline
- A residential house must be constructed within three years from the date of transfer of the original flat.
- Relevant exemption provision
- The article identifies Section 82 of the Income-tax Act, 2025, corresponding to Section 54 of the old Income-tax Act.
- Capital Gains Account Scheme
- Unused capital gains may be deposited before the income-tax return filing deadline, but the deposit does not extend the construction period.
- Joint-loan interest limit
- For a self-occupied property, each eligible co-owner can claim up to Rs 2 lakh in interest deduction.
- Combined deduction example
- If ownership, borrowing and interest are equally divided, spouses may claim up to Rs 4 lakh together.
- Mutual fund gift
- Gifting mutual fund units to a brother is not treated as a taxable transfer triggering capital gains.
- Recipient’s tax basis
- The brother uses the donor’s original cost and holding period when calculating gains after selling the units.