I have purchased house-1 at X place in the year 2005 and the same is on rent. Since then I have moved to place Y. House-1 was purchased with the help of a 15 year housing loan from HDFC.

Now I have purchased house-2 at Y place for my own use and I have again taken a loan from HDFC.

Suppose I sell house-1 after one or two years then I will incur long-term capital gain. Can I save tax on this long-term capital gain by repaying part of my house loan for house2?

?Jignesh

You cannot save capital gain on sale of house-1 by repaying part of the housing loan for house-2. However, if you were to sell house-1 within one year of purchasing house-2, then the capital gain, to the extent invested in house-2 would be exempt from capital gain tax. Note that it is not necessary that the proceeds per se, of house-1 be invested. In fact, since you are selling house-1 later, the same is not even possible. All the law intends is that an equivalent amount that you will earn as capital gain upon sale of house-1 be invested in house-2. This can be done by using personal equity or by means of housing finance. In your case, you have already used housing finance.

I would like to know the rebate for LTC Expenditure. Particularly, I would like to know:

1. Income Tax section under which rebate is to be claimed and the maximum amount.

2. Running LTC block year for claim.

? SP Sinha

As provided by Sec 10(5) read with Rule 2B — Reimbursement of expenses incurred by the employee and his family for travelling to any place in India while on leave or after retirement from or termination of his service is exempt up to –

• Where the journey is by air, an amount not exceeding the air economy fare of the national carrier by the shortest route to the place of destination.

• Where the origin of journey and destination are connected by rail and the journey is performed by any mode of transport other than by air, an amount not exceeding the air-conditioned first class rail fare by the shortest route to the place of destination.

• Where the origin of journey and destination or part thereof are not connected by rail, the exemption shall not exceed i) where a recognised public transport system exists, the first class or deluxe class fare by the shortest route and ii) where such system does not exist, air-conditioned first class rail fare applicable to the distance.

This exemption is limited for two journeys in a block of four calendar years. Where an individual has not taken any LTA during one block, he can avail of it during the first year of the next block. If he does not travel during any of these years, he loses the privilege.

Current block of four years is from 1.1.06 to 31.12.09. Normally, tax matters deal with the FY but for LTA it is the calendar year.

I owned three pieces of land. Subsequently, I sold two of my pieces of land to my brothers and purchased a new piece. Can I avail of the benefit of set off to claim capital gains tax exemption, since land sold is being replaced by land purchased. The whole transaction is between four brothers and family matters.

?Nilesh H Gajjar

Capital gains tax exemption on sale of land is only available if the net sale proceeds are reinvested in another residential property and not land. This is as per Sec 54F of the Income Tax Act.

I have taken a loan in November 2006, from Bhagini Nivedita Sahakari Bank for home repair.

I have claimed the deduction in 2007-2008 u/s 80C for principal repayment, but today I have received news that for the current financial year I can’t claim the principal repayment u/s 80C.

I humbly request you to please clarify the amendment / matter, at your earliest.

?Girish

There has been no amendment. Sec 80C always provided for the deduction against payment by an individual or HUF for purchase or construction (not repair, renewal or reconstruction) of only a residential house (not necessarily self-occupied), the income from which is chargeable under Income from House Property in respect of repayment of loans taken from some specified sources.

I request you to clarify a point on deductions with respect to mediclaim insurance.

I am a senior citizen and so is my wife. I have bought mediclaim for my 2 children, a daughter and son. My daughter’s premium is Rs 3,992 and son’s premium is Rs 2,992, totalling to a combined premium of Rs 6,924.

I have also bought mediclaim for myself of Rs 11,744 and wife Rs 10,400, totalling to Rs 21,789.

My question is how much deduction can I claim on account of mediclaim? Is it Rs 15,000 or Rs 35,000? My parents are not alive. Both, my daughter and son are unemployed and unmarried.

?KS Radhakrishnan

Mediclaim deduction is Rs 20,000 for a senior citizen in respect of premiums paid for self, spouse and children. Additional deduction is available in respect of mediclaim premium paid for parents. However, the same is not applicable in your case. Therefore, based on the data provided, you can claim a total mediclaim deduction of Rs 20,000.

The authors may be contacted at wonderlandconsultants@yahoo.com