How to save tax on long term capital gain from sale of house property


How to save tax on long term capital gain from sale of house property

How to save tax on long term capital gain from sale of house property

We all know that the real estate investment provides good returns over a long term. However during this process we should know how to save tax on long term capital gain from house property sale by looking at various options for tax exemptions.

What is long term capital gain from house property refers to?

If a house property is sold < 3 years from the date of purchase, then, it is short term capital gains. Property sold after 3 years (or 36 months) from date of purchase comes under the long term capital gains. The tax rate on long term capital gain is 20%.

How the long term capital gain from house property is calculated

Long term capital gain is not simply computing the difference between sale value minus purchase value. The value of money ten years back, say Rs 1,000 is not same as today. Hence while arriving capital gains on property sale, the indexation would be done. Indexation is done by computing the past value to present value considering cost inflation year on year. The cost inflation index (CII) needs to be referred to arrive at the present value of the past investments.

E.g. if you have purchased a house property in year 1995 for Rs 10 lakhs and sold for Rs 40 lakhs in 2012, the value of CII in 1995-96 was 281 and 2011-12 is 785. The present value after indexation is 10 lakhs x 785 / 281 = Rs 28 lakhs (approx). The long term capital gain on house property is the difference between the sale value i.e. Rs 40 lakhs minus Rs 28 lakhs = Rs 12 lakhs. Income tax on this would be 20% i.e. Rs. 12 lakhs x 20% = Rs 240,000

How to get exemption on long term capital gain from house property:

1) Buy a new property or construct a new house (Exemption as per Section 54)


If you have sold a house property and have a long term capital gain, you can get exemption by re-investing the amount in a new or another property from the sale proceeds.

  • The exemption can be sought by purchasing the new residential house within a period of one year prior to or two years after transfer of the original house.
  • In case of under construction house, the new construction of house needs to be completed within 3 years from the date of original transfer of house.

I feel this is one of the best methods of getting exemption for long term capital gain from house property sale

2) Open a CGAS

You can open capital gain account with any Government owned bank and deposit the capital gains in this account and file your income tax return before 31st July and save long term capital gain tax.

  • This method is generally used to park the money, till you find a new house.
  • Once you find a new house, withdraw this money and purchase the house any surplus remaining would attract long term capital gain tax.
  • However there is stipulated period for this. You need to buy a new house within 2 years or construct a house in 3 years from the date of transfer of property.

3) Save in 54 EC bonds

In case you are not investing in new property, there is another option to save tax is by investing in bonds as per section 54 EC. These bonds are issued by National Highway Authority of India and Rural Electrification Corporation Ltd. However use this as last option for exemption of long term capital gain from house property sale as the returns would be very low.

  • These bonds are issued for a minimum of Rs 10,000 and in multiples of Rs. 10,000 and the period of investment is 3 years.
  • The maximum amount that can be invested in a financial year is Rs 50 lakhs.
  • If you are investing part of your long term capital gains into these bonds, you would get exemption only to that extent and balance surplus amount would attract tax.
  • The coupon interest rates for such bonds are 6% annually.
  • If you withdraw such bonds before 3 years, you need to pay LTCG tax.

How to save tax on long term capital gain from house property sale

 

Conclusion: Thought investing in real estate is a good long term investment option, while you are selling your house property, try these exemptions to avoid tax for long term capital gains.

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Suresh
myinvestmentideas.com


Article by Suresh

Suresh KP i.e. me have written 500+ articles on this blog. I love doing analysis and identifying the Best investment options.

248 Comments

  1. Harjeet Singh says:

    1.Can I sell and buy two flats at different localities and save LTCG.

    2 If not,  can I save tax buying one flat with 50 % of longterm gain and rest in LTCG Bonds .

    3 If yes to S No 2, how much (max) can be invested in LTCG bonds.

  2. Vivek Singh says:

    Dear Suresh, 

    I boiught a flat in 2000 for Rs 6.5 lakhs. It has appreciated to about 65 lacs now. In 2012 I bought another flat for 1.2 Cr using housing loans of about 90 lacs. Now I want to sell my old house and reduce the loan. Will the sales proceeds from sale of old house attract Capital Gains Tax if they are used entirely for repaying the housing loan? If so how much would that be? 

    Please advise. 

    Best regards 

    Vivek

  3. karlton says:

    Dear Mr. Suresh,

    My Father has sold his flat this year 2014 (it was purchased in 1960) and the amount is put into LTCG account.
    We would like to purchase a flat jointly, with me(his son) as the first name and his name as a second.
    a) if he invest the full amount in this flat with both our name(mine first and then his) can he get tax benefit on the full amount, even if I have a NIL investment in this flat
    b) if he invest the full amount and I invest the balance part, can he still get tax benefit on his full amount
    c) is there a specific point in time or a minimum waiting period where he can gift his part to me and I would own the full flat without paying stamp duty + registration by means of a Gift

    Please advise

    Thanks

  4. sukhu says:

    please answer my qury as under

    *residential property is held by three -mother, daughter and grand son in a CHS jointly.all three are adults and  at the time of sale of the  said property-the sale proceed shall be devided among three-  how and who can avail LTCG benefit ? -whether all three can buy property out of share of sale proceeds &can avail LTCG benefit ? or whether all three can invest in bond upto 50 lakhs in each persons name out of sale proceeds & can avail LTCG benefit ?

  5. Anand says:

    To avoid Long Term Capital Gain Tax after selling a house, one has to purchase or construct a new house and offset the profit against the cost of the new house. Suppose one has purchased some land (as investment) with this profit and has no intention of staying there, should this new house, which should be constructed to avoid LTCG tax, be a pucca house with all permits and approvals in place? Can one construct a temporary structure at minimal cost in the new land to avoid LTCG tax? What's the criteria from the IT dept to ensure that a new house has actually been constructed?

  6. Rakesh says:

    I sold a flat in may 2013, with this money I bought another flat which I should get possession by Jan 2015. I already own 2 other residential properties.  Am I eligible for exemption from long term capital gains?

     

  7. Rajiv says:

    My grandmother had an inherited property (her parents house) in which she was living. As per Hindu Law, her children (my mother and my uncle) and me were equal part owners. On my grandmother's death in 2007, the property ownership went to my mother and my uncle. I wrote off my ownership share in the name of my mother. Hence my mother had 62.5% ownership and my uncle has the balance. The ground floor was given to my mother and the first floor of the house went to my uncle.

     

    In 2010, we decided to go for a joint development with a builder as the house was dilapidated and was in urgent need to repairs. Though we called it a joint development, my mother and my uncle executed a POA in favour of the builder in which they had no right further in the development of the property. In return, the builder was to provide an apartment in the proposed development to both my mother and my uncle and the balance amount in staggered cheque payments. Both my mother and my uncle have no other house in their name. My mother intends to use the amount received to buy another apartment in the town where I reside so as to be closer to me.

     

    The builder has not yet handed over the possession of the flats as construction of the project is still ongoing and is expected to take another 6 months. The builder has also paid less than half the promised payments in all these years, but has promised to complete all the payments before handover of possession.

     

    Here are my queries :

    1. Is long term capital gains applicable on the value of the apartment provided by the builder – our assumption is that since it was in lieu of the house that she was living in, it would not be applicable.

    2. In which year is the capital gains due – our assumption is that it is due this year when he hands over complete possession and makes good his payment

    3. How do you calculate the value of the property in 2010 (year of sale) given that the land and house purchases/construction date back to the early 1940's.

  8. ANKUSH says:

    I want to sell my property in next 2 or 3 months. How much amount should i received in cheque or balance in cash so that there will be no Capital Gain. As i dont want to file my Income tax Return.

    • Suresh KP says:

      Ankush, You should compute long term capital gains as per process indicatd in this article. What ever is indexed amount is the tax free amount. Balance amount is taxable

  9. radhakrishnan says:

    i have purchased a house in 1998 for 7 lakhs and  I have sold+same for rs 24 lakhs in 2013.my doubts are

    1.whether we have to pay tax on the entire amount of Rs 24 lakhs.

    2.what is the capital gain on this sale of property.

    3.i have received an amount of Rs 10 lakhs as advance before registering the property out of which i have purchased a site for 10 lakhs.in feb 2013.

    4.if the amount of capital gain  is exempted from tax,whether we need to file income tax return as iam not having taxable income though i have the PAN No.

    kindly clarify

    • Suresh KP says:

      Hi Radhakrishnan 1) You need to pay amount on capital gains amount 2) Cost inflation index in 1998-1999 is 351 and in 2013-14 is 939. Means your Rs 7 Lakhs should have been Rs 18.73 Lakhs. If you sold at Rs 24 Lakhs, than your capital gain is Rs 5.27 Lakhs. You need to pay capital gains tax on this 3) If you have purchased another property or invested in Capital gains account, you can save tax. Pls read the article on possible avenues to save tax 4) Since it is taxable, you need to either invest in possible avenues or pay income tax and file ITR

  10. Ajai says:

    I had sold a residential property that attracted long term capital gains tax. I had invested the money into a Capital Gains Special account. I have not been able to finish building my house in these three years. What will the penalty on such delayed spending from the Capital gains account be?
     

  11. Bilwara Sitaram Nabar says:

    Dear Sir,

    I am seafarer by profession and enjoy the status of RNOR and hold NRE savings account in India. I have been maintaining more than 190 days outside India for many many years. 

    I was residing with my parents in their house till June 2008 

     

    I had purchased a 2BHK flat (first one) in Pune  in the year 2001 for 7.5 Lakhs. I had taken a home loan for that purpose and all the payments were made through NRE account. The flat was vacant till May 2006 after which I gave it on rent till May 2011. I have paid the taxes on the income I earned because of the rent.

     

    I then purchased a 3 BHK flat in Kharghar Navi-Mumbai in year 2006,of which I got possession in June 2008. I am presently residing in the flat since June 2008. The cost of the flat was 53 lakhs for which I had taken a home loan and all the loan repayments were made through NRE account 

     

    I also purchased 1 BHK in Panvel in the year 2009 as an investment with my wife (resident Indian) as joint owner. All the payment was made by me through my NRE account.

     

    In the year 2011 I sold off the Pune 2 BHK flat for 28 lakhs and transferred the money to my wife's resident account.

    In the year 2012 I sold off the Panvel flat for 21 lakhs and transferred money to my wife's resident account.

     

    In the year 2012 I purchased another 2 bhk flat in a pre-launch offer costing 85 lakhs as investment.The 100% cost of the flat was paid to the builder. The flat is still under construction. 

     

    In the year 2012 I purchased another under construction 2 BHK flat costing 57 lakhs as investment.

     

    In purchase of both these flats the entire amount from the sale of Pune flat was invested in these purchases, 37 lakhs were paid from my NRE account and continue to pay the remaining amount as and when the builder demands for the 2nd 2 bhk flat from my wife`s resident account from the money which I had given to her after sale of the Panvel flat. 

     

    I am yet to receive possession of both these flats as they are still under construction and possession is expected in 2016.

     

    I want to know whether I am entitled to pay capital gains tax. 

     

    My wife has paid tax on the amount which I transferred to her account.  What would be the tax implication if one transfers money to wife's account   

     

    Can you please clear my below doubts:

     

    The amount earned from sale of the 2 flats was invested in two other, under construction flats , at a higher value.

     

    So am I  eligible for exemption from LTCG TAX as I have purchased 2 flats of higher value within the stipulated period required for exemption from paying LTCG tax?

     

     

    My income in India is NIL.

    Will clubbing of income apply to me as i had transferred money to my wifes account before buying another properties?

     

    The amount that I have transferred to my wive's account was given as a loan to her and I have got a signed agreement made between us for the purpose. This arrangement was made as I constantly sail in Somalian pirated zone where life is always at stake and I wanted to make my wifes future secure. My wife has paid tax on whatever interst earned from the loaned amount under the category of …."INCOME FROM OTHER SOURCES"

     

    IS THIS KIND OF ARRANGEMENT ACCEPTABLE UNDER THE BYELAWS OF THE IT ACT/DEPARTMENT

     

     

    Thks & Brgds

    B S. Nabar

    • Suresh KP says:

      Hi Nabar 1) If you have invested in another flats within time frame indicated in article, yes they are eligible from LTCG 2) Yes clubbing of income would apply 3) This kind of arrangement is acceptable provided your wife is a earning member. If she is earning, then it is easy to convince any one that this is not being done just to save tax. If she is not earning, IT office can always prove that you made this arrangement just to save tax.

  12. Sabyasachi says:

    Dear Suresh

     

    My father bought a residential land in Nov 2009 and sold the same in Mar 2014. He used the entire proceed to but a residential appartment jointly in his and my mothers name in Apr 2014. The new property is under construction and will be registered by Dec 2014. All transactions are legitimate and white through nogotiable instruments and under PAN. This will be his 2nd flat , he owns another flat jointly with my sister.

    Which year can he claim LTCG exemption? and how? What documents will he need to produce.?

    Please help.

     

    Regards

    Saby

  13. Rahul says:

    Dear Suresh,

    I am a co-owner of two similar residential proeprties (apartments) with identical holding structure along with with my brother & mother & both of them were bought in 1994. Out of the 2 properties, one was sold in Dec 2012 & a new residential apartment was bought in Jan 2013 thus availing the benefits of LTCG. However my query is in regard to the second property which we want to sell and buy another residential apartment.Is there any restrction to avail the benefits of LTCG again under Section 54 in case a person holds more than one residential property with identical holding structure ? Or will I get the same benefits of LTCG if the new residential property is bought against the sale proceeds of the 2nd property within the time frame of 2 years ? 

    Best Regards

    Rahul Yogi

  14. Rajeev says:

    Hi Suresh,

     Can you please clarify my doubts regarding the valid documents and amounts used for calculating capital gains. My case is given below.

      . I am asking this question as the registeration is done at the guidance value and is shown in the sale deed, while the actual value is present only in the sale agreement.

     The amounts involved during buying(April2011) are  a) 35 lakhs in sale agreement b) 28 lakhs in sale deed.

      The amounts involved during sale(May2014) are a) 53 lakhs in sale agreement b) 37 lakh in sale deed.

     While selling the full amount is received as a combination of cheque and direct bank account transfer so all money recived during selling is PAN linked.

     

    regards,

    Rajeev.

     

     

     

     

    • Suresh KP says:

      Rajeev, While I agree that sale deed shows less amount, but you received complete amount indicated in sale agreement in pure “White”. Consider this amount as capital gain. Alternatively pls meet tax consultant

  15. Avishkar Mishra says:

    Dear Sir,

     

    My mother inherited a share of residential property from her mother i.e. my grand-mother in year 1991 for Rs. 60,000 (60 thousand)  as her share, which she sold off year  June'2013 for Rs. sixteen-lakhs as her share.  Amount received is completely reinvested in our first residential house as joint property with me i.e. her son.

     

    I am confused, is she Liable to file any ITR for AY 2014-2015 for any such LTCG.

     

    Thanks

    Avishkar

  16. amar chatterjee says:

    Dear Suresh,

    I want your kind expert advice on below:

    1.Can husband & wife set off their individual capital gain against purchase of one single property?

    2. How the capital gain is assessed if the newly purchased property with capital gain amount is sold in future?

    with regards

    Amar

    • Suresh KP says:

      Amar, Any profits / income of non earning spouse can be clubbed. However I am not sure about capital gain / loss set-off. You may need to take tax consultnat advice on this. Regd second question, it would be based on the indexation of cost of year of purchase and year of sale. Based on this, any capital gain is there, you need to pay tax on this. I have given computation on how to do indexation of a property for a year.

  17. Dhiren Barot says:

    Mr. Suresh – Can u please resolve my problame as i m very much confused for buying property (resale) from other person but due to capital gain this deal comes on question mark. Below is my confuston and brief and pl give me best solution for this deal.

    I have choose one resale property from X person and it was buelt in 1986., when x party purchase this at cost of Rs, 31000/-.

    Further my budget is upto 16K and i show my all most all aspect and he says that he is ready to deal with me at cost of Rs 16,50,000/- and sale deed with Rs. 700000 OR value for house is Rs.16,75,000/- sale deed 9 lacs. I tell him that if he ready for sale deed upto 12 lacs then only i can get bank loan up to approx.10 lacs. but he says if sale deed upto 12 lacs then he will be capital gain.

    So i would like to know that how much amount is taxable for him. and should i pay 10% amount for his capital gain.

    awaited for your reply

    thanks

    dhiren

  18. Niranjan Gandhi says:

    I have recently sold my house which was jointly held by myself and my wife. The money received from the sale has been distributed equally to the two of us as that is how we had invested in the house. I plan to buy two apartments with this money: one in my sole name and another in my wife's sole name. Can each of us claim the cost of the respective apartment as deuction from the money that is received separately by us?

  19. Suresh Raghunath Shinde says:

    Dear Suresh

    I have sold flat at Rs.50 lacs in 13-14 and my long tern capital gain after indexation is Rs.33 lacs. When I received compensation from sale of flat , i have repaid my loan against other property.Can save capital gain tax by again

    taking loan upto Rs. 33 lacs and invest in new property.

    kindly advise

     

  20. Anoop says:

    Hello Suresh,

    My father in law is planning to sell his propery and buy a new apartment on his daughters name with that money.

    > Is there any way he can save the long term capital gains tax.

    Thanks

    • Suresh KP says:

      Anoop, There are two transactions. One is selling the property and deriving the capital gains. Since he would not be buying any other property in his name, necessary capital gain tax has to be paid. Second is purchasing the same in daughter name where Gift tax guidelines would apply for daughter as she is in the receiving end. Since “Daughter” falls under “Relative” terminology in IT act, no income tax is payable. 

      • Nakul says:

        Hi Suresh

        If the property is gifted first to daughter (by paying necessary stamp duty) and then sold by daughter to buy a new one, what capital tax implications it would have?

        Thanks & Regards

        Nakul

         

         

        • Suresh KP says:

          Nakul, where an asset is acquired by gift or inheritance, the period of long term capital asset shall be recokned from the date when the previous owner acquired such asset and the indexation shall be allowed accordingly from the year of acquisition by the previous owner

  21. Aruna Patil says:

    Resp. Sir,

                   we booked 2 BHK flat  before we sell our original 1 bhk flat. we will sell the 1 bhk flat when we reside in new 2 bhk flat. then do we liable to pay capital gain tax?  

    • Suresh KP says:

      Aruna, It does not depend on 1BH or 2 BHK. 1) Indexed value of old house in the year of selling it 2) Cost of new flat. Both should happen one after other and any differential value would fall under capital gains and necessary capital gains tax needs to be paid.

  22. Hameed says:

    Dear Suresh,

     

    I have booked the aprtment in december,2012  and will be handedover only in March, 2015 and sold my old apartment in october 2013.As per the capital gains rules the foloowing is being noted:

    Section 54: Old Asset: Residential Property, New Asset: Residential

    Property

    Under Section 54 – Any Long Term Capital Gain, arising to an Individual or HUF, from the Sale of a Residential

    Property (whether Self-Occupied or on Rent) shall be exempt to the extent such capital gains is invested in the

    1. Purchase of another Residential Property within 1 year before or 2 years after the due date of transfer of the

    Property sold and/or

    2. Construction of Residential house Property within a period of 3 years from the date of acquisition

    Provided that the new Residential House Property purchased or constructed is not transferred within a period of 3

    years from the date of acquisition

    If the new property is sold within a period of 3 years from the date of its acquisition, then, for the purpose of computing

    the capital gains on this transfer, the cost of acquisition of this house property shall be reduced by the amount of capital

    gain exempt under section 54 earlier. The capital gain arising from this transfer will always be a short term capital gain.

    Quantum of Deduction under Section 54

    Can you pleas clarify my doubt?

    Regards,

    Hameed

    • Suresh KP says:

      Hameed, You have indicated the capital gain exemption clause, but I could not see any question. Can you pls post your question ?

      • Hameed says:

        Dear Suresh,

        Dear Suresh,   I have booked the aprtment in december,2012  and will be handedover only in March, 2015 and sold my old apartment in october 2013.As per the capital gains rules the foloowing is being noted: Section 54: Old Asset: Residential Property, New Asset: Residential Property Under Section 54 – Any Long Term Capital Gain, [...]

        My Question:I booked flat for rs 83 lac in December 2012 and sold my old flat in October, 2013 for rs 53 lac.I want to know about capital gains?.

        Regards,

        Hameed

         

         

  23. All says:

    I m selling an old family building to a builder. The total consideration I am getting is Rs. 5cr  plus multiple flats in the new building that the builder will construct on my sold plot. My quiry is do I have to pay property gain tax on the value of falts in the new building that will be constructed on the sold plot?

  24. Amit Jivani says:

    I had bought a property in 2002 for rs 550000 & sold the same in 2013 April for 42 lakhs out of which I prepaid 2 lakhs to clear my loan outstanding & balance I have put ad fixed deposits in capital gain tax.

    due to some reasons I need to withdraw approx 5 lakhs

    what is the procedure and how pls advice

    • Suresh KP says:

      Amit, You can with draw such amount, but you need to pay long term capital gain tax in the financial year in which you are withdrawing.

      • amit says:

        Thanx for your prompt reply
        But in my case I have deposited the full payment received from the sale of property and capital gains will be lesser so then also do I need to pay tax?

        I hope u understand what I m trying to say

  25. Nilesh says:

    Sir,

    I have purchased flat in Jun2010 and registered it. I paid all dues by dec 13 and took possession. I sold flat in same month dec 13. Now gain will be considered as short term gain or long term gain. if long term, please provide RBI/IT reference site. Reason: I want to apply for zero % TDS as I am re-investing entire sale amount into another property in india. But tax officer says its short term gain and he cant issue TDS for sale.

    • Suresh says:

      Hi Nilesh, Here is the guidelines from IT website. Page no. 15 and 16 can provide clarity about this. Any house sold after 36 months is long term capital gain. http://incometaxindia.gov.in/Archive/HowtoComputeyourCapitalGains_18062012.pdf

  26. Rajani Manjunath says:

    Dear Sir,

    In year 2005, one of the big builders in Bangalore lanuched a resedntial project and a 2bhk was sold for Rs. 38 lakhs. 

    I bought a 2bhk flat in resale while the property was still under construction  from the 1st buyer in year 2006 by paying additional premium in cash of 10 lakhs to the 1st buyer by making a tripartiate assignment agreement between the builder, myself and the 1st buyer.

    The builder was supposed to handover the property in year 2008 and I had cleared all the installments by 2008 and only remaning amount of about 7.5lakhs was pending which was supposed to paid during posession. The builder gave the posession of flat in 2010 after obtaining posession certificate from concerned authorities, but I took the posession of the flat only in 2013 from the builder. 
    Now, I am planning to sell the flat which is worth about 1.1 crore. 
    I have not registered the flat as of today and want to sell it without registering it. 

    As per some people, the property doesn't have to be regiestred to claim long term capital gains tax. Also, I am planning to invest the money in another property.
    Can I claim long term capital gains tax as this property was bought in 2006, but cleated all payments in 2008 and the builder got the posession certificate in 2010. 
     
    Your response to my query would be very much appreciated.

    Regards,
    Rajani

    • Suresh says:

      Hi Rajani, I don’t think you can sell the flat as is without any registration. How the other buy can pay you money on your name without transfer of property from your name to buyer name. Coming to money part, as long as you show this income as long term capital gain tax and deposit the money in LTCG account and use it for new property purchase, I don’t think there should be any issue. You should be able to prove that this money has come from selling the property. 

      • Rajani says:

        Sir,

        Your quick response is very much appreicated.

        I am planning to sell it to another buyer by paying the tranfer fees to the builder and the builder will inturn will transfer the rights of the property from my name to another new buyer thorugh another tripartiate assignment agreement. The earlier tripartiate assignment agreement will get cancelled and later the new buyer can get it registered in his name from the builder.

        I am already claiming tax benefits for the housing loan. Since the property is not registered in my name (only assignment agreement in my name from earlier buyer and builder – year 2006), can I claim LTCG via indexation or should I claim without indexation ? I can not show the 10lakhs which I paid premium as I paid that amount in cash and the agreement value is only 38 lakhs. I am planning to buy another plot and construct the house this year itself after selling this property and adding some additional amount. 

        Builder started to handover the property in 2010 after getting OC, but I took posession only in mid 2013 and as of today, property is not being used.

        Thanks in advance for your response.

        Regards,

        Rajani.

  27. Ravikumar says:

    I bought a residential site for a considereation of 16 lakhs in 2008 availing Bank loan. I plan to sell this property for 43 lakhs.   From the sale proceeds I plan to repay the loans of about 12 lakhs (Bank loan of Rs 6,.5 Lakhs and personal loan of Rs 5.5 Lakhs)

    With the remaining amount, i plan to buy a house costing 90 lakhs by availing Bank loan of Rs 60 Lakhs and PF savings of Rs 10 Lakhs.

    Want to know, whether I have to pay any capital gain tax

     

    • Louis says:

      Greetings Mr. Suresh, 

      Sir,
      We have brought a flat in Mumbai in Jan 1999 purchased for registered value 7.5 lac in both husband / wife names, now I want to sell it and getting some sizable amount say 1CR what will be the situation where as tax LTCG etc.

      Sir please give us you valued advise how about to go. We have also brought a flat underconstruction in July 2011 on HDFC loan, can I repay my loan for this and also awail tax reduction for LTCG for the old flat we are selling.

      Louis
      Regards, Thanks 

      • Suresh says:

        Louis, If we do indexation from 1999 to 2014, your cost of Rs 7.5 Lakhs would hve a value of Rs 11.14 Lakhs. So, if you sell the flat for Rs 1 Crore, you would have a capital gain of Rs 88.8 Lakhs. As per my knowledge, you cannot repay for existing loan which was taken 2 years back. You should invest this money in the items specified in the article. 

  28. V L Natarajan says:

    Dear sir,

    I sold my property sometime on Nov,2012 and the capital gain is Rs.20 lakhs.

    I opened Capital gain account in Indian Bank( SB Capital gain account) for Rs.20 lakhs in the month of July,2013( before due date for filing IT for that assessment year )  with the intention of using this money in buying a property within 2 years and or constructing a new house within 3 years in a plot earlier purchased.

    I purchased our ancestral house for Rs.3 lakhs in April,2013 and spent Rs.7 lakhs for renovation/repair and construction of this house. Totally, I have spent Rs.10 lakhs in this house and used Rs.10 lakhs from the capital gain account for this purpose.

    Now I am left with Rs.10 lakhs in my capital gain account.

    I would like to know the following from you side:

    a) Can I invest balance Rs.10 lakhs  now in Rural Electrifiaction Corpn Ltd- Tax Bond with benefits under section 54ED of IT act for 3 years to avail tax exemption?

    b) If REC tax bond is not possible now, can I use balance Rs.10 lakhs in costruction of another new house within 3 years from the date of selling property.Some people are telling that I can invest only in one property.Please clarify.Awaiting your reply.

    Regards,

    V.L.Natarajan

  29. Vimal says:

    I have sold a flat (Mumbai) after holding for 3years. To save long term tax —

    1) Can I use the money to re-pay the loan taken for this flat ( Mumbai)?

    2) Can I use the money to re-pay the loan taken for another flat (Bangalore) within last year?

    3) Can I use the money to return the money borrowed (personal) to buy flat (Bangalore)?

    Your reply will be much appreciated. And also if you have any more suggestions?

     

    • Suresh says:

      Vimal, First is you should know what your capital gains are.e.g if you have purchased for 10 Lakhs and with indexation after 3 years it should have been Rs 12 lakhs. Now you sold the flat for Rs 15 Lakhs, 3 Lakhs is profit. Now none of the above 3 items indicated would provide you any tax benefit. You should follow the process I indicated in article to get any tax exemption. You can buy new property or deposit in capital gain account for some time before you buy property or invest in capital gain tax bonds to get any exemption

  30. srikanth says:

    dear sir,

    i purchased a land of area 642 sqyrds in the year 1984 for rs 60000/- as per documents,and i constructed 3 independent houses in the year 1987,1996,and 2011 respectively.now iam selling the total area including houses for rs 6500000/-as per the present govt market value.actually iam sellin for 16000000/-.but as per documents the total amount iam receiving is 6500000/-.i have 3 sons and 1 married daughter,i want to spend 4000000/- on the new house immediately and i want to make fixed deposit of 2500000/- on my wifes name and distribute the remaining amount to my childern.please suggest me in detail how to efficiently distribute the remaining amount to my childern by reducing capital gains.

     

    regards

    • Hameed.Md says:

      Dear Suresh,

      I have booked a flat for Rs.84 lacs in December,2012 and sold my old flat (2001 registered) in October,2013 for 52.5 lac.Can I get any discounts in capital gains and also to know the procedure. 

       

      • Suresh KP says:

        Hameed, These are two different transactions. 1) You have purchased a flat in Dec-2012 (Apr-2012 to Mar-13 is financial year period). 2) You have sold old fat in Oct-2013 (Apr-13 to Mar-14) period. Here your second transaction, you need to show capital gain and pay necessary tax. The proceedings should be used to buy a new flat within a period or invest in CGAC and get exemption. 

  31. KGP Reddy says:

    Dear Suresh,

    Thanks for your humble services to tax payers community.

    I bought a residential house in Bangalore during Apr 2014, 1/3 of it is self occupied and 2/3 is rented out , this is my first property and purchased under bank loan , I have declared a rental income as other income for the year 2013-14, while my 80 C coverage is more than a lac , i have no opportunity to claim tax rebate for repayment of prinicipal amount against loan, however i have been suggested to  claim full interest paid to bank under tax rebate for 2014. i need your help in understanding 2 following questions.

    1. Whether am i right in claiming full tax rebate after declaring 100 % interest paid to bank towards bank loan because it is self occupied / let out property.

    2. I have taken some hand loans from relatives and friends to pay 20% amount to the seller in acquiring the property, how do i show interest part of these hand loans being paid by me to avail tax benefits for 2013-14.

    Thanks for your kind response.

    KGP Reddy

     

    • Suresh KP says:

      Hi Reddy, 1) Yes you can claim 100% interest amount up to the limit specified and claim this as self-occupied property. In case you are going for second housing loan, then you need to declare only one as self occupied and other as let-out, hence I don’t see any issue here 2) You cannot show any interest payment as deduction except for housing loan. It could be personal loan or hand loan, it cannot be shown. To come out of this, you can take top-up loans from bank and pay of this hand loans and claim the amount officially as interest up to the limit available

      • KGP Reddy says:

        Dear Suresh,

        Thanks for your clear response,going by your clarification, i feel i should have been more clear in my question, the scenario is interest paid to bank for the year 2013-14 is more than 1.5 lacs and bank loan is more than >30 lacs and i am claiming 100 % interest tax rebate as a let out property ( partially occupied by me too)which is over 1.5 lacs, pl clarify is this the right thing to do, one of the CA/Tax consultant initially suggested this to me. Thanks once again for your great help.

        • Suresh KP says:

          KGP, Here are the options available 1) Consider this as self-owned property. The maximum limit would be Rs 1.50 Lakhs of interest limit on housing loan 2) Declare as let out property and claim entire interest as exemption irrespective of limit, but show a rental income, get exemption also for municipal tax and standard deduction from such rental income income. Second option works out well when you have very high interest rate to be claimed as exemption. Hence your CA/Tax consultant suggested this way.

  32. chopra says:

    Please suggest me"

    My father-in-law gifted me a property in 2008(bought in my name only in 2008) worth 30lacs for my future security due to my husband's a lot of bad habbits. But I sold that property in distressed sale at 29lacs in 2009 for up bringing and studies of my both children. And i (with my both children) seprated with my husband without divorce after selling property. My husband is having other properties in crores.Do I have to pay any kind of tax for that money?

    • Suresh says:

      Hi Ms. Chopra, Sorry to hear about your story. Though while taking this as gift, you may not need to pay tax, but since you sold this property, the sale consideration would be treated as long term capital gain and you need to pay tax appropriately. My suggestion is pls consult a tax auditor in your area who can provide next steps to pay tax as this pertains to 3 years back and you may even need to penalty.

  33. Chetan Kamble says:

    Hi Suresh

    First of all wish u and ur family a happy and prosperous diwali.

    Could you please guide me on below scenario?

    I had purchased a plot in 2010 for 17 lac (5 lac cash payment + 12 lac loan). Now in 2014, I am planning to construct 3 storey apartment (approx construction cost is 30 lac). So I will be taking 30 lac loan. Out of these 3 floors I am planning to sell 1st floor (expected price 30 lac). And repay the loan. other 2 floors will be used by
    me. So to summarise
    1. Total investment : 47 lac
    2. Total Loan : 42 lac
    3. Total loan repayment : 30 lac

    Is there any kind of tax I need to pay in this whole exercise?

    Thanks,
    Chetan

    • Suresh says:

      Hi Chetan, I am not able to answer this query as it involves partial selling and I do not want to give partial feedback. Request you to consult a tax consultant.

  34. Goyal says:

    I have sold the property in september 2013. I have capital gain 0f 50 lakh. I also booked an apartment in 2010 which is in under Construction. I will get the posseion in 2014 and registry will happen same time. So can i claim exemption under section 54. So my query is

    As per income tax act, I have to constrct house within 3 year, but I have booked apartment in 2010 and sold apartment in 2013, so can i claim for exemption? Please help me.

  35. Amit Bhayani says:

    Sir I have purchase a flat in nov 2010 under construction of 55lc + 4 lc registration charges total cost is 59 in which I paid 34 lc frm myside n 14 lcloan n abt 10 lc balance amt to paid in installnent which bank ll pay .
    Now if I sale flat in dec 2013 in 1cr 10lc n buy another flat for 80lc how much capital gain I ll get as still building is under construction as in my knowledge I need only to invest profit in house . 1 thing more flat is in 3 name n new flat ll b also in same 3 name. Can u help me out in elobarte manner.

  36. VIKRANT says:

    Hi suresh, What's your opinion for Reliance Tax Saver Fund ?  

  37. ajoy says:

    dear suresh 

    i bought a residential plot jointly with my wife in 1993 but did not construct. the agreement made says residential plot with house thereupon of one square brick with mangalore tiles but there isnt one in reality. two questions (1)  can i sell and reinvest full proceeds u/s 54 in a multi storey apartment i purchased two months ago. i own 2 already. the property reflects in my balance sheet alone. no specific share mentioned in the agreement. (2) can ltcg be shared?

    • Suresh says:

      Ajoy, If you go as per documents 1) Yes, but it should be in your wife name as the earlier house was in your name 2) As per my knowledge LTCG cannot be shared

  38. Muks says:

    Hi Suresh

    I have got 80 lakhs from the sale of an property that was bought in 2002 for 10 lakhs. Based on the calculation capital gain tax,is coming to around 14 lakhs.

    I have looked at buying the following:

    – 4 plots of 2400 sqft each (40 lakhs)

    – Construction of house (1500 sqft) in the above 4 plots – (20 lakhs)

    – 4 acres of agricultural land (10 lakhs)

    Could you please clarify if all the three investments can be eligible for exemption of LTCG?

    Thanks

    Muks

    • Suresh says:

      Hi Muks, Capital gains from sale of property can be set-off only against purchase of property. e.g. plots or agriculture lands are not allowed. If you are planning to buy a plot and going to construct within 2 years, this would be exempted from capital gain tax to the extent which you are using for purchase + construction cost.

  39. Naresh says:

    I want to sell the property purchased in aug.2005 in the name of three persons. Now I want to sell it in 2013 and want to purchase another property in the name of three same persons. Is this will be valid tranction to save capital gain

  40. lalu says:

    I have purchased a land for 2 lakhs during the year 1990 and sold it to my uncle for Rs.8 lakh in the year 2002 under an agreement made between us. The amount used for children education. Now (2013)the land formaly registered in the name of my uncle. Present value as shown in the registary is 20 lakh but I got only 8 lakh during 2002. At that time I was not a tax payer. whether the agreement of 2002 is valid for tax exemption.The agreement was in stamp paper but not registered. Whether I have to show this transaction in my ITR and what steps I have to be taken.

    • Suresh says:

      Hi Lalu, You need to account under IT for the amount received in your bank account of Rs 8L in 2002. Hence it is immaterial when you made the agreement or registered. Your Rs 2L investment would have been Rs 5.20 Lakhs as per cost inflation index. Means if you received Rs 8L as return, Rs 1.80 L is your long term capital gain. Since you have not paid the LTCG tax in 2002, ideally you should pay tax along with interest for last 11 years which would be huge amount (2% per month). You may consult a tax advisor in your area in case you want to proceed further.

  41. V. SURESH says:

    Sold House Property for 45 Lacs & used the money for business purposes. The LTCG arising out of this transaction amounts to 35 Lacs. In the same year purchased another house property for 45 Lacs by availing housing loan of 40 Lacs. Can I claim the deduction for re-investment in house property?

    • Suresh says:

      Hi Suresh, If the LTCG is Rs 35L, you should have invested this amount in buying new property to claim the deduction. Since only Rs 5L is used, you can claim only this amount as deduction and Rs 30L is taxable.

  42. vivek says:

    Dear suresh

    I have bought an flat in under cibstruction scheme in march 2010. Now the flat possesion will be expected by 2014 end and registry will happen at that time.

    Since it has been 3+ years can I sell it and take IT exemption as long term gain calculation as you suggested?

    • Suresh says:

      Vivek, Do you want to sell your flat to get IT exemption. I could not understand. I have indicated that if you sell any flat, you need to invest in another residential property within 2 years and within 3 years you need to construct a house. Looks this is mis-understood. Please inform in case my understanding is incorrect.

    • Vasu says:

      Hi Suresh, I purchased a flat in Year 2000 and sold it now for Rs 30 Lacs. Need information on the following

      1. If I decide not to re-invest in flat or house again, what is the tax amount I need to pay now to IT Dept 

      • Suresh says:

        Vasu, You have not provided what is the cost price. As per indexation chart of 2001-01, it is 406, Current financial indexation chart is 939. Means you should multiply your cost price with 939 and divide with 406. What ever amount you would get is your indexed cost price. e.g. if you purchased for Rs 10L. You should do 10L x 939/406=20 Lakhs (approx). If you have sold it for Rs 30L, your capital gain is Rs 10L (Rs 30 minus Rs 20L). You need to pay 20% as capital gain tax which would be Rs 2L

        • Vasu says:

          Hi Suresh, I purchased the flat for Rs 8.0 Lacs. But do not have a proper consolidated bill for the said amount except the Sale deed agreement (which would be at Govt. Guideline value and less than the price for which I purchased). Is there a way to get the bills now through an auditor ?

          • Suresh says:

            Hi Vasu, As per my knowledge, you cannot go for a certiifcation from auditors for bills. Your sale deed + any other bills which you can show which are used for flat can only be considered.

  43. Digvijay says:

    I have a flat which I bought in June 2010 for 50L and it is still under construction (80% paid). I have booked another flat in Nov 2012 which is under construction (allotment done in Jan 2013). I have paid  30% till now and construction have started. I am planning to sell my earlier flat for 80L and please advice if I can use the proceeds/profit (30L) into my new booked flat and save tax.

    • Suresh says:

      Digvinay, You can do that. As per IT act, residential property sale proceed capital gains has to be investd in another residential property (not land) to get exemption. You should do that before the deadline or else deposit amount in CGAS account

  44. amit singh says:

    Dear Suresh

    I have one 20 years old residencial plot and now i am getting 1.6 crore for that plot.

    plz suggest how much amount i have to take in w/b ratio and i am also intresting in investing property buying after selling that plot.So plz suggest how much amount should i take in w/b and how much amount i have to invest in property after getting money to safe tax .

    waiting 4 ur reply

    • Suresh says:

      When you said w/b I hope you are referring black and white. The capital gain amount is computed based on the inflation index chart. In which year you have purchased the plot ? Based on this capital gain amount to be computed on which you need to pay tax.

      • amit singh says:

        SIR

        I HAVE PURCHANGED IT IN 1993 SO PLZ HELP ME TO TELL ME HOW CAN I TAKE MONEY IN BLACK AND WHITE . I HAVE PLANNING TO BUY PROPERTY AFTER SELLING THE MONEY.SO I WANT TO KNOW HOW CAN I SAVE TAX AND MONEY AMOUNT TO TAKE IN WHITE OR BLACK .PLZ HELP

        • Suresh says:

          Amit, Difficult question. Take entire amount in white and invest whole money in new property. Everything becomes white and no further janjhat.

        • Deepak says:

          Hi Sir, i bought a flat in 2004, one in 2006 and another in 2011. I sold first flat. I know that LTCG cannot be exempted by investing in buying another property. Am I correct? can I save the LTCG by investing in government bonds. Or do I need to invest full amount of sale deed in government bonds.

          please advise ASAP. 

          Regards

          • Suresh says:

            Deepak, You can buy another residential property to save tax within time limit. There are no restrictions about number of properties. However wealth tax may apply if you have multiple properties. You can invest in government bonds or CGAS account and get interest on your capital gains. Check the article it would provide details about where you can invest.

  45. Kumar says:

    Sir,

    I have already booked a new under construction flat during July 2013 and paid advance of 40% (40 lacs) from my bank account. I am planning to sell my 7 years old flat within one year period and would like to adjust the capital gains (may be 35 lacs) against the newly booked flat advance amount without opening CGAS account. Is this adjustment allowed ?

  46. n s sapra says:

    sir,my mother bought a house for 20000 in 1981 and sold the same in 2013 for 2350000.what is the capital gain? to save the tax she wants to buy the REC BONDS with her two sons as nominees.Bond forms allow only one nominee.Can she file two applications with REC?

    sapra

    • Suresh says:

      Hi Sapra, In 1981 the cost inflation index is 100 and in 2013 the cost of inflation index is 852. For Rs 20,000 purhcase in 1981, the equivalent inflation index would be Rs 20,000 / 100 x 852 = Rs 170,400. If your mother has sold property for Rs 23,50,000, then capital gain would be Rs 21,79,600. You need to pay tax on this. You can consider taking multiple REC bonds with different nominees.

  47. Mushahid ali khan says:

    Sir I have sold my property for Rs 40 Lacs in Aug 2013.. Construction was made in 2003. To save long term capital gain tax can I invest 20 lacs in Bonds Of NHAI and R.E.C and 20 lacs for buying a property ?. Please clarify. Every where I find that the amount can be invested in buying or constructing of  a enw property or for purchase of NHAI . and REC bonds . Please clarify. 

    M.A.Khan

    • Suresh says:

      Hi Khan, If your query is whether you can buy property and invest balance capital gain in Bonds, the answer is YES. You can invest balance capital gain amount in these bonds. 

  48. rbajaj01 says:

    Hi, I am purchasing a flat for 45 lac through a home loan. Also I will get 50 lacs from sale of a land in next six months which will attract long term capital gain tax. To save on this long term tax, can I pay the home loan amount in full to get benefit of exemption from paying tax on long term capital gain. Pl reply

  49. lokesh says:

    hi suresh

    I purchased a flat in 2002-3 at 5 lacs and sold same in 2013-14 at 22 lacs against a home loan.
    In 2011-12 I purchased a flat at 25 lacs(registry value) with a 25 lacs loan with an annual interest+principle outgo of 3.43 lacs pa.

    my queries are ;
    1. Can i show nil capital gain tax adjusting the capital gain against my earlier purchase.
    2. If not, can I adjust my loan outgo against the capital gain

    3. If I invest this balance in buying a new flat.

    a.can I do this in next 2 years

    b. only the indexed difference liable for capital gain tax has to be invested in buying a new property.

    Please help

  50. Sukesh Phatak says:

    Dear Suresh,

    Suppose if I am having 2 residential properties. And I sold the One in which I am not residing. Can I claim the exemption if I purchase new residential property within 1 year?? My question is,  if we want to claim such exemtion, is there any conditions, that we should stay in that property which is sold ? Somewhere I heard that we cannot claim exemption if we were not residing in the sold property and we can claim only if we were residing in the concerned property for minimum of 2 years.

    Please reply

    • Suresh says:

      Hi Sukesh, There are no such restrictions. You can invest in another property by selling your second house. However you should do that within the permissible time, else you should atleast deposit amount in Capital gain account and use it within 2 years. 

  51. Deepak says:

    Dear Suresh,

    I have a property in joint name with my wife and now plan to sell it. The gains qualifies for short term captial gains (as it was held for less than 3 years). As I understand the tax rate will be applied as per the income tax slabs.

    Query: As it is jointly held property, would the gains be split between me and my wife and the tax be paid accordingly as per our individual tax slabs applicable? 

     

    Thanks in advance.

    Regards,

    Deepak

     

    • Suresh says:

      Hi Deepak, Yes the capital gain amount need to split between wife and husband and should be added to your income and income tax would be paid as per income tax slab. Is the percentage of share of property indicated in property document? If yes, the capital gains also would get split into same proportion.

  52. jitender kaur says:

    Dear sir,my mother is 89.My brother bought a house in 1981 for 18000 with initial money 4721 and monthly instalments of 133 for 13 years.He died in 1984.She approached the court for transfer of property in her name in 2009 and got it in 2o11.She paid 10230 /as outstanding amount .Thus total payment of Rs 36050 stands paid.The said property was transferred in her name by Housing Board  in 3/12.The said  house stands sold in 8/13 for 23.50 lakh.What is the tax liability?Long term or short term?Can she save the tax?She affixes thumb for transactions.

    Jitender

     

  53. Anitha says:

    Dear Mr.Suresh,

    The facts are as follows:

    Sale of plot in Aug' 2011

    Investment in CGAS in July' 2012

    Amt of LTCG- Rs.25 lacs

    Now, we are looking at finalising a flat under construction. The builder will ask us to pay for the UDS value first which would amount to a value lesser than the LTCG to be invested, say Rs.10 lacs.

    My queries are:

    1. Will this amount of Rs.10 lacs amount to investment of LTCG? If not, what should I do with the difference of Rs.15 lacs that needs to be invested?

    2. Irrespective of the first query, will the completion of construction ie 3 years stil hold good, because I am looking at investing in a mega project which would involve construction of multi-storeys, so the time involved could be more or less.

    3. By when at the latest, should I have this amount of LTCG invested?

    Kindly explain.

    • Suresh says:

      Anitha, Your flat should be registed to get exemption. 1) If you paid Rs 15L, you can deposit balance of RS 10L in capital gain account till you pay the amount to builder and use it up to 2 years for purchase and 3 years for construction 2) If you exceed this period, you need to pay tax on LTCG amount. 3) As indicated in artilce, you should invest in capital gain account before filing the IT return by 31-Jul

  54. V L Natarajan says:

    Dear sir,

    I sold my plot in Bangalore in Nov,2012,which was bought in 1996.

    I have opend Capital gain account in a public sector bank and deposited capital gain amount.

    I am planning to 1)buy our ancestral house from my brothers and sisters and also 2) construct another house in a plot which I own with the proceeds of capital gain. Also, I would be spending money for major renovation of our ancestral house

    Can I claim tax exemption for these two properties and also for renovation of my ancestral house?

    Also, after these properties are acquired, if still I am left with some capital gain amount, can I invest balance amount in REC or NHAI bond?   

    Request your comments.

    • Suresh says:

      Natarajan, You can invest in multiple properties. Any surplus still left out would be treated as long term capital gain. Yes you can invest in REC or NHAI bond to get exemption.

      • V L Natarajan says:

        Dear sir,

        Please let me know the time limit in which we have to utilise capital gain amount in 

        a) in buying a ready house

        b) in construction of new house in a plot.

        Awaiting your reply.

        Regards,

        V.L.Natarajan,Bangalore. 

  55. Kumar says:

    Sir,

    I have sold my property ( residential flat ) in Pune during the year May 2010 and subsequently purchased another residential flat under construction during July 2010 to cover my long term capital gains. I paid the amount of capital gains in installments within 2 years .still the registration of my flat is not done as the possession is delayed and they have promised to register in Oct 2014.Given this situation am I exempted from tax on long term capital gains.

    • Suresh says:

      Kumar, You would get exemption up to 2 years only for purchasing and 3 years for construction of property. Since this period is over, you would not get benefit. Please consult tax professional in your area so quickly check the tax liability. You should have foreced the builder to do registration in your name.

  56. naresh says:

    sir ,I had bought a property in sep  2009, as per construction link plan in 35 lac , Now I am getting 75 lac of this property and I have paid only 16 lac to the compny ,Means  I am getting 59 lac in hand.and same time I am buying another property in 90 lac . I want to know that can I take full paymen(t 59 lac )in white and same I paid to the another party , is ther any I-tax liabilities. If at all how best can i make this deal . please guide me immd.

  57. jay says:

    Dear Sir,

    My father sold our agri land which is outside the muncipal limit of 8 kms so as per section 2(14) of the Income-tax Act 1961. it doesnt fall in capital gain tax ( correct me if i am wrong); Now if this is correct can we invest that amount to BUY a new house but on my name?

    Awaiting for quick reply;

    Thanks & Regards;

    Jay

  58. raj varma says:

    i had a ancestral property sold it for Rs 15lacs and paid Lic housing loan on another property.amm i liable for capital gain tax. I am a NRI .

    please let me know the rules.

    thanks

    Raj

     

     

    • Suresh says:

      Hi Raj, As per my knowledge you can claim this as exemptoin provided that full amount is used for foreclosure of loan or part payment of loan. If any amount is unutilized, you need to pay tax as per applicable tax rate.

  59. Vandana says:

    Hi Sir, I have few queries regarding a proposal of sale of my property. My property is getting quoted @ 1crore 90lakh and the buyer is pushing for white money as 1crore 60 lakh. I am planning to buy another property with approx amount of 1 crore 30 lakh, keeping rest as hard cash with me. So now my queries are:

    1. What will be the probable amount of tax i have to pay .
    2. What would be the impact of taking such a high amount as White Money as if I purchase another property with white money 80-90 lacs the difference will be huge and the tax amount would be enormous.

    • Suresh says:

      Vandana, You have not indicated in which year you have purchased. We need to compute the indexed cost of property so that the difference between Rs 1.9 Crores Vs indexed cost would be profit and you need to pay tax based on that. I agree that white money would be used for tax computations. However there are ways to save tax. See the points what I indicated. You can purchase LTCG bonds to save tax and would get interest too.

  60. Nikhil says:

    Dear Suresh,

    I am  planning to upgrade my house in 2015 by selling my current home.  Below detailed query is to understand full picture of my tax planing in 2015 and later. i am aware that law can change any time however would like to plan based on current laws and later will adjust my decesion based on modification in law in future if any.

    Below is scenario.

    I purchased a flat in December 2011 in pune after taking home loan of 25 lakhs for five years duration. Total price of property at that time was 47 lakhs.
    I want to upgrade my house in year 2015 (after 3 years) by purchasing a new house of approx 1 crore. I plan to take home loan of 80 lakhs from bank and approx 20 lakhs would be my contribution at that time.
    I will clear my current home loan of 25 lakhs before dec 2014 by doing pre-payment of entire loan amount and full settlement.
    After I purchase new home (lets assume in Feb 2015 for my scenario), i plan to sell my old (current) home. Assume i get 60 lakhs by selling by currnet home.
    Sale proceeds of first/current house (60 lakhs) will go towards part payment of new home loan so that my loan amount remains minimum (20+60+20) 20 lakhs only.

    Please note that first i want to purchase home in 2015 and then sell my current home as i don’t want to shift in-between to rental home.

    So far , I have not been availing benefit of 80c from home loan because i already have more than 1 lakh investment in 80C other than home loan (PF etc). However from december 2011 i have been availing section 24  benefit as interest on current home loan.

    I have following queries if I go for above arrangement.
    1) In 2015 onwards returns , will i get benefit of 1.5 lakhs interest as per section 24 of my second home loan (which i will purchase will feb 2015)  ?
    2) My new house (which i will purchase in 2015) will be considered as my first house or second house as per income tax law because that is only house I will have (though technically that would be  my second purchase). how much benefit i will get for interest on this new home loan 1.5 lakhs or unlimited ?
    3) Do I need to deposit proceeds of first house (current house) in 2015 in any capital gain bank account and then do part payment of second home loan ?
    4) Do i need to pay any wealth tax or notional rent if i purchase new property of 1 crore (in feb 2015) but  not able to sell by july 2015. if yes, will i get refund bank in 2016 return (assuming it is sold between july 2015 to july 2016)
    5) Till what month/year i must sell my current house or there is no restriction.
    6) Is above plan good or any suggestions with which i can save more tax.
    7) How taxation will differ if instead of taking ready to move in property i purchase under construction flat in feb 2015 which will get completed ,let’s say in Feb 2016.
    8) while taking second home loan , is it good idea to inform bank that though i am taking loan of 80 lakhs but i will do part payment of 60 lakhs in few months . this is not a tax related query but in case you know………..

    • Suresh says:

      Several questions, took some time to understand. Trying to answer each of the questions 1) Yes. Since you would take housing loan on second house, you are entitled for loss on house property like earlier house. 2) The amount is fixed and maximum irrespective of number of loans you have taken 3) Yes, you should deposit in CGAS account and pay off from that account .It looks that the transactoins are done legally and there would not be any questions. 4) Yes 5) As per my knowledge your new house purchase should be done with old house proceedings. Hence selling after purchase would not arise 6) Suggestions are indicated in this article, you can go thru them 7) There would not be any change except that you would close the transaction faster and within time limit 8) You should. This would answer some questions from their side about any pre-closure charges or any additional tips on how to handle such transcations in better way.

  61. Srujana says:

    Hi suresh,
    I am a homemaker I have a house in bangalore in which am residing.i sold my apartment for 30 lkh now I want to invest this to buy a site in my husband ‘s name.can I do this if so how.thanks srujana.

    • Suresh says:

      Hi Srujana, If the property is in your name and you are selling, the profits after indexation would be taxed. You may get exemption based on points listed here. However if the property is purchased by your husband, you would loose such benefit and you need to pay tax.

  62. Amit Kumar says:

    Dear Suresh,

    Read your articles, very informative. I have one question. I sold a flat in sep 2011 and deposited the LTCG amount in nationalised bank on 30 Jun 2012 ie before due of filling income tax. Now I shall be completing two years in Sep 2013 my questions are

    (1)       Can I buy a HUDA plot in Dec 2013 & construct before Sep 2014. Will this purchase of HUDA plot in 3ed year and also the construction within 3ed year correct?

    (2)       Can I pay initial token amount by full LTCG held in bank right now and remaining amount by bank loan by Dec 2013 ?

                 Thanks

    • Suresh says:

      Amit 1) You should close that in 2nd year itself and construction can be done in 3rd yrear. If you buy in 3rd year, you would not get benefit You should complete registration before 2nd year completion. If you do in Dec-2013, I don’t think you would get exemption.

  63. spsingh says:

    Hi Suresh
    I booked my 1st flat in 2009,Allotment letter says the date of allotment as 22nd sep 2009
    Total cost was 26lacs,this project got delayed and still under construction.
    I have got a buyer and now I will be able to sell this at 35 lacs.
    I have a bank loan also for which I couldnot get tax benefits as this is still under construction

    I booked another flat in another project in march 2011,of which I got possesion in march 2012,I got this
    Propert registered in may 2013 .
    I am ahaving

  64. Sachi says:

    I have purched a plot on 07-10-1996 of purchase value of Rs.64374(including Stap duty etc). I invest another Rs.12000 in the year 1997 for its development (electric poles, Land filling etc.).The total ammount comes from my father and some of from my husband.  Now I intend to Sell it Expected selling price is about Rs. 5,00,000 . What should be the capital gain. I am a homemaker. what should be the capital gain tax and how I save this tax (if any) At present I am noy a tax payer. My Husband has a house in his name and he is an tax payer.

    • Suresh says:

      Sachi, The cost indexation value of your property now would be Rs 76,374 / 305 x 939 = Rs 2.35 Lakhs. Your capital gain would be Rs 2.65. Please check this artilce about options on how to save tax. 

  65. Mukesh Puri says:

    I sold a plot and made long term capital gains of about Rs. 30 lakhs in July 2011. The amount is deposited in different capital gains accounts in a nationalised bank. I am yet to invest it in a flat or house. Do I have to pay the tax on it this year or next year?

    2) The tax liability will start from July 2011 or after completion of 2 ( or 3?) years ? In other words, the tax liability will be on 30 lakhs or 30 lakhs+ interest thereupon? The amount has been kept in Capital gains accounts right through. Would appreciate your feedback.

    Regards,

    Mukesh 

    • Suresh says:

      Hi Mukesh, If you opened capital gains bank account and deposited you need buy new property before 2 years. Else you can show this as profit in that year and pay necessary tax.  2) It would be on Rs 30 Lakhs only. Interest received (if any) would any way would be added to your annual income and necessary TDS needs to be paid based on your income tax slab every year.

      • Mukesh says:

        Thanks. Please advise till when can I pay the tax- 15 September 2013 or  31st. March 2014.As per my understanding my tax liability will be 20% of Rs. 30 lakh capital gain i.e. Rs. 6 lakhs.

        2. I had registered under a Govt. of India ( CGEWHO) housing scheme in December 2010 and paid advance of Rs. 2.4 lakhs. While CGEWHO has officially intimated me about my name being in the draw for successful allottees, the construction is yet to begin. Can I claim setoff for this amount? If I can, should I claim the set off because I am not sure if it can be claimed only once in a lifetime.

        Mukesh

        • Suresh says:

          Mukesh, This has to be closed before 31-Jul and file ITR so that the transaction is listed in ITR. since 31-Jul is already over, you may need to pay interest on tax liability. Pls check with tax professional in your area on how to handle such situation. No it is not that you can set-off once in life time. You can set-off against a property and any unutilized amount of profit would attract tax.

  66. suhas dixit says:

    we had one plot with bunglow by our father constructed in 1976 value 1,50,000  , gave it for developer with agreement for getting 4 flats in year 2012 value 65 lacs. what is tax lalblity ? is it at the year of agreement or the year for sale deed.

    • Suresh says:

      Suhas, Indexation prior to 1980 is 100 and FY 2012-13 is 852. Means the cost of plot of Rs 150,000 / 100 x 852 had a cost inflation of Rs 12.8 Lakhs. If you have a sale value of Rs 65 Lakhs, your long term capital gain is Rs 52.20 lakhs. 20% of it comes to Rs 10.4 Lakhs is the tax liability. It is the date of sale deed.

  67. Chetan says:

    Hi Suresh

    I purchased one flat in 2006 for 15 Lacs. I have taken 10 Lac loan which I am repaying on monthly basis. Now till july 2013 I paid 5.5 lac as interest.

    I purchased second flat in 2012 for 38 Lac.

    Now I am planning to sale my 1st flat for 36 Lac.

    Question 1: If I repay my second flat loan with this 36 Lac, will I get the exemption? if yes then on what amount. If not then

    Question 2: How the long term capital gain from 1st home will be calculated?

    Thanks in advance,

    Chetan

    • Suresh says:

      Hi Chetan, 1) As per my knowledge, you cannot use the sale proceeds of first house to pay-off second house prepayment. 2) LTCG for your first house is computed as below a) You have purchased house in 2006. The indexation is 497  (2005-06) b) Indexation of selling period of Jul 2013 is 939 (2013-14). Means your Rs 15 Lakh house at indexation would be (Rs 15 Lakhs / 497 x 939) = 28.34 Lakhs. Your LTCG would be 36 Lakhs minus Rs 28.34 = 7.66 Lakhs. You need to pay 20% on this gain i.e. Rs 1.53 Lakhs. 

      • Chetan says:

        Thanks Suresh.

        I have few questions again

        1. Is this Indexation calculation includes Interest paid? I mean; is there any difference between Indexation calculation for Property purchased a. Using Loan b.Without Loan?

        2. Can you please help me with the process of opening CAGS a/c?

        Thanks for your time and help

        Chetan

  68. Iniyan says:

    Dear Sir,

    It is of interest to go through your answers to the queries. Thanks for the same. Sir,I have a question.

    I bought a plot and constructed a house during 1987 cost about Rs.200,000.00. Now I am jointly promoting a flat construction with a builder. I am taking a flat and apart from that sale properties of my share would fetch about Rs.50 lakhs. The purpose of doing this is to buy a flat for my son which is costing around Rs.70 lakhs. Is it possible to take exemption under section 54 if the new property is in my son's name. If not, what is the best solution to this? If I have to pay capital gains tax, what would be the approximate tax payable? Kindly guide me to wriggle out of the situation as both the construction are in progress and I have to complete the procedure before Mar 2014.

    Thanks in advance for your guidance in the matter.

    Best Regards

    Iniyan.

     

     

    • Suresh says:

      Iniyan, Buy the new property in your name and later on you can give gift to your son. “Gift” to son would fall under term “relative” and is not taxable

      • Iniyan says:

        Dear Suresh, 

        Thanks a lot for your instant solution. Do I have any concession being a senior citizen, or it needs to be registered only in my single name. Can it be in our joint name as an alternative?

        Thanks in advance and Best Regards

        Iniyan

        • Suresh says:

          Iniyan, There is no such concession for Sr. Citizens. I am not aware whether joint name can be accepted for saving long term capital gain. I suggest you to consult tax expert in your area as I do not want to give false details.

  69. T Karan says:

    Hi Suresh,

    I sold a flat in May , 2013 for 80L. I deposited the gain in CAGS. I am planning to buy a new property which is in pre launch state. I won't get the possession in next 4 years. Will I get the excemption from the Income Tax If I pay the builders from CAGS withing 3 years ?

    Please advise.

    Thank You,

    T Karan

    • Suresh says:

      Karan, As per tax law, you need to close this within 2 years, else you may not get exemption. Check with your builder whether he can register in your name. Posession may be later.

      • Deepak says:

        Suresh – If I have understood correctly if the poperty is registered prior to posession and within 2 years of previous sale, there will be no taxation?

        Thanks – Deepak

         

        • Suresh says:

          Deepak, The question was about CAGS a/c. After depositing the capital gain amount, can we buy after 3 years? My reply was it should be done within 2 years, else it would be taxable.

  70. Ajay says:

    Hi Suresh,

    I bought a flat in Feb 2010 for 56 lacs on construction linked payment plan. I have paid 38 lacs (spread over 2010, 2011, 2012 and 2013) to builder till now as construction has progressed slowly. The registration will happen only at time of possession which is still 2 years away. My questions

    1. If I sell this flat in 2013, will it attract short term or long term capital gains tax?

    2. Can I take benefit of indexation?

     

    • Suresh says:

      Ajay, as per my knowledge, it should be registered in your name to count indexation and get indexation benefits. It would attract shor term capital gain if you sell in 2013 itself.

  71. Ram says:

    Hi Suresh,

    Property constructed 5 years ago and the bills are not available to show the spent on the constuctions. Planning to sell the property now and want to understand how can I show my investment on construction to reducte capital gain tax.

    Regards,

    Ram

     

     

     

    • Suresh says:

      I heard that if you pay municipal tax for such property, it is simple proof about your property. I heard there are several ways which a chartered accountant tax expert can guide. Please contact your local tax expert

      • Vasu says:

        Hi Suresh,

        I am selling my flat for 30.0 Lacs. Couple of my queries got answered here. Here are some of the other queries. Kindly help me with the information

        1. Can I purchase a vacant land out of the property sale amount to avoid CG Tax ?

        2. To reduce CG Taxes, can we also show the yearly property taxes paid for the property so far (till the time it was sold) ?

        Regards

        Vasu.R

        • Suresh says:

          Vasu, You cannot sell property (House/flat) and buy plot to get exemption. Regd second point, no you cannot show it. However you can get exemption in your IT Return ie. show total rents received minus standard deduction minus any house taxes paid

  72. rakesh says:

    Hi Suresh,

    Very nice information. I bought a plot(#1) in Apr 2005 and sold it in Apr 2012.Long term capital gain came around 12.65 lakh. I invested the sale proceeds of this plot in two parts. Part 1 – I did a loan prepayment of Rs 12 Lakh for a flat bought in Jun 2011. Part2 – I did a loan prepayment of Rs 8 lakh for a plot(#2) purchased in Jan 2010.

    May i request to suggest if i can save Long term capital gain tax in this scenario?

    Thanks in advance

    regards

    Rakesh

    • Suresh says:

      Rakesh, To get capital gain exemption you should invest in another property within a defined period. Since you sold in Apr-2012, but repayment happened in 2010 and 2011 for other flat and plot, you cannot prove to IT dept that sale procees are used for this. Beyond that you should invest in property only and not plot.

      • rakesh says:

        Hello Suresh, Thanks but i am still not clear. Since a part1 of my sale proceeds(done in Apr 2012) is used for part pre-payment of the loan for the flat purchased in Jun 2011(this is within 1 year prior period), so i assume this part1 can be exempted from Capital gain. May i request to kindly confirm?

        • Suresh says:

          Rakesh, How Jun-2011 purchase can be offset against sale done in Apr-2012 ? Sale should happen first and purchase lateron. You may not prove this to IT dept.

          • Amol says:

            Then how one can take benefit of the clause – 1 year prior period. If it is sale should always happens first and purchase later, then 1 year prior clause does not make sense.

          • Suresh KP says:

            Hi Amol, Looks I need to clarify. Sale should happen first and then purchase of another property should hapen next. In your case you are saying that you first purchased and then sold your old property.

          • Amol says:

            Hi Surash,

            Thanks for reply. But I just want to understand how and when one can use the clause 1 year prior of LTCG.

          • Suresh KP says:

            Amol, It is 1 year after you get such capital gains. 

        • PRANAB says:

          Rakesh, you are right. Your LTCG can be allowed for deduction to the extent you have invested in purchase of your house from 1 year before to 2 years after the tarnsfer (sales) of your house. Income tax dept. has published manual  entitled "How to compute your capital gains". Extracts from Chapter III, page 27 "If an individual or HUF having LTCG from transfer of a residential house makes investment to purchase or construct a residential house, the amount invested in the new residential house is allowed as a deduction from the LTCG . The new
          residential house can be constructed within 3 years from the date of transfer or can be purchased one year before or two years af ter the date of transfer". Unfortunately, I am not able to upload the book here.

           

  73. Deepak says:

    Hi Suresh,

    Looking at your prompt resposes I am tempted to ask a question regarding my situation:

    I have invested in a under constuction property since Jan – 2010. The possession of this property will be given to me in Aug – 2013 (Almost 3.5 years since the first payment was made) and I will register and pay the stamp duty at the time of posession. If I sell this property after acquring possession, would the proceeds from the sale be considered as Long term or Short term Cap gains?

    Appreciate your response.

    Thanks in advance.

    Deepak

     

    • Suresh says:

      Deepak, The period starts from date of registration and not based on date of advance. If you sell now after registration, it would come as short term capital gains. 

      • Deepak says:

        Suresh – Thanks for your response. I am following your post and appreciate the way you have been responding to all queries.

        I have an additional query – Since last year my tax status has changed to NRI. I have no income from India. How much will the STCG rate be in my case.

        Thanks,

        Deepak

         

         

         

        • Suresh says:

          Deepak, NRI has to file returns if 1) there is any salary income or 2) if there is any STCG/LTCG or 3) If there is any business income / professoin. Since you are falling in point 2, you should file returns and there are no specific guidelines for NRI’s in this regard. STCG should be clubbed with individual’s income (in this case, you do not have any) and pay tax as per individuals tax slab.

  74. sarath babu says:

    A Plot in my wife's name sold in june 2013 for Rs. 7,50,000.00, my question is capital gains is applicable to that amount? she is non income tax payee. She is house wife

    Sarath Babu

    • Suresh says:

      Sarath, If you have sold plot which is in your wife name, idealy you got good cash. You need to deposit in bank, so bank would have asked for PAN. If you have PAN, you need to submit ITR. How you dealth this transaction? Cash or cheque ? 

  75. sai venkat says:

    Hi Suresh,

    I have a piece of land in my name. Can I sell it and use the proceeds to build a house on another plot which is in the name of my wife, to avoid capital gains tax.

    • Suresh says:

      Hi Sai, As per my knowledge, you cannot do that, If you wish, you need to pay tax on LTCG. To make it doubly sure, please approach a tax expert for this query.

  76. y sharma says:

    I sold a house in feb 2012 and bought a new one in feb 2013. however, i did not put the money in a capital gains account (i was not aware of this) and had simply put it in a new account…can i still claim exemption when i file for returns this year (by 31 july 2013)

    • Suresh says:

      Sharma, You should do that before filing the returns (31-Jul). However since last year you have not done, request you to consult tax expert who would guide you on how to do this now. You may need to pay interest in some cases. Please check before filing this year returns.

  77. Vivek says:

    Hi

    I have sold a plot in Nov 2012 for Rs 6500000. which I purchased at Rs 2300000 ( considering index cost). I have booked a flat in year 2010 and now I will get a possession of flat in next year (2014). Total flat cost is Rs 7000000 but I have made Rs 2000000 payment between year 2010 and Nov 2011.  Can I claim against full Rs 6000000. or Do I need to claim against (70-20)=50 lakhs. And pay the tax of remaining 15 lakhs. Actual flat sale happen at time of possession. So why cant I claim against full 70 lakhs.?? Some people say that you can claim only for money that I used from Nov 2011 till Nov 2013.?

    • Suresh says:

      Vivek, You should show proof that you used these funds for purchasing new flat. Since the old flat is sold in Nov-2012, you cannot show that you made a down payment of RS 20 L upto Nov-2011. In case of IT scrutity, you would not be able to prove that and you may need to pay penalty amount for showing incorrect claim. In case you still have question, you may approach your local tax expert whether Rs 50L is right or whether you can claim Rs 70L

  78. Clifton says:

    Hi,

    I purchased a flat in 2009 for 3 lakhs and last month sold it for 28 lakhs in june 2013, now after 1 month in july 2013 i purchased a new flat for 28lakhs, will i have to file my income tax returns and also will i be taxed?

  79. Rishi Kapoor says:

    Hi,

    I purchsed ltcg bonds 6 days after completion og 6 months of the prprty sale. Can I claim thebenefit.

    • Suresh says:

      Hi Kapoor, As per point no.1, you should invest the money within 1 year from the date of sale to get exemption benefit. Since you have done within 6 months, you can claim the benefit.

  80. Rubin says:

    My father is selling our old house with a capital gain of 1cr. He intends to buy a small house for not more that 50 lacs.But this would take more that an yr to be finalized. 

    1) So should he deposit 50 lacs in CGAS and buy 50 lacs worth 54EC bonds to save LTCG tax?

    2) If we need some anount for personal expense, the only way would be pay 20% tax?

    My father is Sr citizen.

    • Suresh says:

      Hi, 1) You should deposit the money before 31-Jul to claim exemptoin. 2) You need to buy a new house within 2 years, else you need to pay tax.

  81. yogesh says:

    Hi Suresh,

    Please advise for the following:

    I got a Huda plot in draw in 2001. For which I paid total 470000/- (indexed cost as per 2012 is around 850000/- as per few CAs) in say 8 installment upto 2008 including interest etc and then paid 25000/- for its registry in April2012. Then I sold this PLOT for 2672000/- in April2012 and invested money in a FLAT in Gurgaon. Now my question is do I need to invest 2672000 – 850000 = around 1780000/- in new flat or do I need to invest whole amount 2672000 – 25000(registry cost) = 2647000/- in FLAT? If so, then this is really strange that goverment is asking tax two times meaning first I paid tax during 2000 year for my saving of 450000 (general income tax) and then I need to pay tax again on 850000 (indexed value of 450000) in 2012 and to avoid it again i need to invest this 850000???? (all values are approximate). please adviseasap. I hope we need to see section 54f

  82. Aanya singh says:

    Hello
    My husband sold a property but bought a new one in my name…. Will he be entitled to claim Property gain tax exemption….?
    Many thanks

    • Suresh says:

      Aanya, No. If the property is sold by an individual, he should buy the new property within the time frame or invest in capital gains scheme. Else he needs to pay tax.

  83. sandeep says:

    Hi Suresh,

    I have a similar question but would really appriciate if you could answer my queery:-

    "I have bought a flat in November 2011 (registration & all the formalities in Nov'11 itself) for Rs. 38,40,000/-, the possesion of the flat was given to me in June 2013. First query is when will the actual date start for my long term investment, is it the Nov'11 when i got my flat registered on my name or June'13 when I got the possession?

    Secondly, if it starts say Nov'11, and I sell it in Dec'14 after completing full 3 years say approx. for Rs. 62,00,000/-, what would the tax I need to pay to the government if I do not want to buy any other new property?.

    Please reply…

    Thanks a lot in advance…

    Sandeep

    • Suresh says:

      Sandeep, You are asking for computaton of tax based on future value i.e. Dec-2014. We would not have indexation table for future years. Your date of purchase / registration would be date which needs to be counted. 

  84. Avinash says:

    Hello,

    I have sold an ancestral property at arnd 40 lacs and from that amount i purchased new property of rs 35 lac having my wife as first owner and me second owner. Does this invite the taxation on whole 40 lac as i have purchased property on wife name.? Please help.

    • Suresh says:

      Avinash, You sold the property and you got the money. However you purchased new property in joint name i.e. your wife name and your name. You need to pay tax on differential amount i.e. Rs 5L

  85. rao says:

    is it necessary to reflect the capital gain from house property in income tax return,if so which form we have to use file the tax return.

    further,we have already invested the capital gain recveived from the 1st property in 1st year.

     

    Regards,

    Rao

  86. Abhishek says:

    Hi Suresh,

    I had purchased a property in 2010 on joint names(Me & Wife) and sold it in 2013.  I have earned a some of Long term Capital Gain. I am not investing the net consideration in new property.

    My question is

    1> If the new property is on My Name only, will I be eligible to claim Exemption under section 54/F etc for the entire amount. Please note that in the new property, some part will be paid by my Wife.

    2> If the new property is again on Joint name, still are we eligible for 100% exemption on Capital Gains. ?

    Thanks

    REgards,

    Abhi

    • Suresh says:

      Abhishek, Point no.1 – Yes. Since legally it is in your name, you can claim the exemption 2) Yes even this. Net, if your proceedings are used for new property irrespective whether it is jointor in your name you would get exemption as long as your new property value is higher than old property.

  87. Tajinder bansal says:

    Hi,i have purchased a house in june 2011 and sell after two year i.e june 2013.i purchased it Rs 23 lakhs from which i take loan of 18 lakhs.i pay 5 lakhs to bank in this two year.20000 per month.now i sold that house in 44 lakhs.Is it long term capital gain or Short term capital Gain. and how can i save tax from that.i want to buy new house.plz reply

    • Suresh says:

      Tajinder, Please read the article completely. Options to save tax have already been specified in this article. Please deposit your sale proceeds in capital gain bank account and use them for purchase of new house property. If the value of new house is lower than the sale price of old property, you can save tax.

  88. Sampath says:

    Hi  Suresh,

    I am about to sell a land for about 22 Lakhs in July 2013.   I had earlier purchased a house for Rs 55 lakhs during the month of september 2012.  The capital gains for the above land (that is planned to be sold), comes to about 13 lakhs.

    My questions is, can I get capital gain tax benefit for this land sale , by showing the house purchase I did with in one year to this sale ?

    How to go about doing this (declaring my capital gain tax saving on account of my earlier house purchase) ?   Do I need to take the help of an auditor ?

     

    thanks,

    regards,

    sampath

    • Suresh says:

      Sampath, You should deposit your sale proceeds in capital gain account in a bank and utilise the same for sale proceeds of new house. This way, you can avoid and save tax. Talk to your auditor with date of purchase of new house and date of sale of old house.

  89. venkat says:

    Hi suresh,

    i purchased a plot in 2008 for 9 lakhs.in 2012 we gave that plot for Development  to construct apartment.after constructing 3 slabs now the development people stoped the construction coz lack of money.so i want to sell the plot with construction for 65 lakhs.so please give me the suggestion to exempted from tax.till now i dont know anthing abt this tax.please give me the clarification.please mail me.i wanna talk to u once.give me your number.

    • Suresh says:

      Venkat, Your plot cost + development cost, please add it up. Check the indexed amount (2008 for plot cost and 2012 for development cost). If you want to sell for Rs 65 lakhs, see the indexed amount of 2008-plot cost + 2012 dev cost with today’s value. If the amount is higher than Rs 65 L, you need to pay tax on difference. Alternatively you can deposit the proceeds of sales in capital gains account and buy another property. You can avoid the tax.

  90. sushant says:

    Hi Suresh,

    good article about long term capital gains.

     I have purchased flat at cost of 30 lakhs around 2 years back but flat registration happened on 1 year back and i am planning to sell it to 40 lakhs and flat is still under construction. so how much tax do I need to pay on this? if I plan to buy another flat with that profit within 1 year, in this case do I need to pay tax?

    it would be good if you have any article on short term capital gains.

    Thanks in advance.

     

    • Suresh says:

      Hi Sushant, You have not specified the years. I am assuming that you purchased in 2011-12 year and registered in 2012-13 and now want to sell in 2013-14. However since the registration happened only in 2012-13, this would get counted. The CII index was 852 in last year and current year is 939. Means your Rs 30 lakhs flat could have been 33Lakhs. If you sell for Rs 40L, your capital gain would be Rs 7 lakhs. You can deposit your sale proceeds in capital gain account with any bank and buy other flat/house. In case you buy for lower amount. that would become capital gain and you need to pay tax.  Regd Shor term capital gains, sure, I would do that in next 2-3 weeks.

  91. Sharath says:

    Hi Suresh,

    Plot purchase value in 2007 is Rs. 5 lacs and the selling cost now is Rs. 30 Lacs. If i sell this plot and buy another plot, will capital gain tax be applicable as it is plot and im not planning for construction in next 3 years. kindly reply

    • Suresh says:

      Sharath, When you sell the plot and intend to buy a residential property or purchase a plot but need to construct within 3 years, the amount should be deposited in capital gain tax account in any bank. If you are just buying a plot and not construction, it would be deemed as capital gain and 20% tax would get deducted after cost inflation index is applied. 

  92. Priyanka says:

    Hi,

    My father has a land which he bought in 1999 for 2 lacs. Now he wants to sell it for Rs. 35 lacs. In this case how much tax do we need to pay?

    We do not want to reinvest the money but on the other hand he has started building a co-operative flat in 2011 and that is not completed yet. Hence can we show that the money we will be receiving after selling this property are getting invested to build up the new flat?

    • Suresh says:

      Priyanka, 1999-2000 inflation index is 389 Vs 20013-14 is 939. Means your Rs 2 lakhs investment has inflated to Rs 4.82 lakhs (Rs 2 lakhs / 389 x 939). If you sell for Rs 35L, you have a capital gain of Rs 30.17 lakhs. You need to pay 20% as tax. Means you need to pay Rs 6 lakhs (approx). Regd your second qution. amount from sale consideration has to be deposited into capital gain account scheme. Payments for purchase of new flat should be done from this account – You should be able to proove that you have used sale proceeds of RS 35L for construction or purchasing of flat. If you keep money in bank or FD and say you have used it for flat, IT dept may trace it easily. All banks accounts are linked with PAN and it is very easy to check for such large amounts.

  93. Parag Joshi says:

    hi

    can i buy multiple property (2or3 flats, of a plot and flat, ets) after selling my house.

    i dont have any other property in my name

     

  94. Deepak says:

    I sold a flat X in Jun 2013 with LTCG 62L. Parallely i bought a flat Y in 2006 thro' home loan costing me 70L but the same was handed over and Registered in Oct 2012. Home loan is still running which i am paying off thro' EMI. Can i offset LTCG of X against purchase of Y……Key to understand if i can say Y was handed over with in year from selling of X hence LTCG can be offset here?

    • Suresh says:

      Deepak, LTCG can be adjusted from a sale and subsequent purchase. If you have purchased and registered a house in 2011-2012 year and sold in 2013-14, you cannot set-off. It should happen in same financial year that too, sale should happen first and purchase later.

  95. pawan says:

    i had a property in my name & father which was bought for Rs.4cr in  2010 and consructed. now after two years we have sold it for rs. 5 cr. i have all the constructions bills. I had also deposited short term capital gain from my name. but not of father as considered long term capital gain. A loan also paid 70 lacs during consrcutions. i want to purchase a commercial property now. i want to know should i purchase the property in joint name and i should show loss in capital gain as i had more expenses of constructions.

  96. Rajesh says:

    Sir  we have purchased a plot in unauthorised colony in 1983 for rs 15000 only  in delhi and in 1987 we constructed house expenditure around 5 lakh rs and sold same house for rs 35 lakh in April 2013 and also purchased a new house costing us  rs 16.50 lakh Plus 1.30 lakh expenditure on registry in same month  so total new house cost us rs 17.80 lakh so now I want to know whether we are liable to pay property tax if yes then how much and how to avoid it looking forward for ur prompt response ,thanks 

  97. Sheela Chavan says:

    Hi Suresh,

    I have a flat which i purchase for 3 lakhs and now i am selling it for 25 lakhs after 5yrs. Currently i am working in dubai. I am planning to buy a flat in Mumbai for around 75 lakhs, what should i do for not be taxed for the 25 lakhs i receive from my old flat?

    Thanks &Regards,

    Sheela Chavan

     

    Reply

    Suresh says:

    May 29, 2013 at 4:15 pm

    Hi Sheela, If you buy new house within 1 year, you can get exemption on these long term capital gains. If you think you cannot make a purchase before 1 year, invest in CGAS account with any bank in India and get exemption upto 2 years from the date of slae. After 2 years, the amount would be taxable.

    Hello Suresh,

    Thanks for your quick reply. I have already paid the token for the new flat so just wanted to know the 25 lakhs money which i receive for the old flat can i directly put it in my savings accounts and pay it for the new flat? and what else i need to do to show that i have purchased the new property and when?

     

    • Suresh says:

      Sheela, I have already responded. Repeating again. 

      “Hi Sheela, If you buy new house within 1 year, you can get exemption on these long term capital gains. If you think you cannot make a purchase before 1 year, invest in CGAS account with any bank in India and get exemption upto 2 years from the date of slae. After 2 years, the amount would be taxable”

  98. Sheela Chavan says:

    Hi Suresh,

    I have a flat which i purchase for 3 lakhs and now i am selling it for 25 lakhs after 5yrs. Currently i am working in dubai. I am planning to buy a flat in Mumbai for around 75 lakhs, what should i do for not be taxed for the 25 lakhs i receive from my old flat? 

    Thanks &Regards,

    Sheela Chavan

     

    • Suresh says:

      Hi Sheela, If you buy new house within 1 year, you can get exemption on these long term capital gains. If you think you cannot make a purchase before 1 year, invest in CGAS account with any bank in India and get exemption upto 2 years from the date of slae. After 2 years, the amount would be taxable. 

  99. Savio Clifford says:

    Hi,

    I am a Indian citizen,I am selling my house after staying there for 9yrs, but now am working in UK for 3yrs, so is the procedure for tax excemption same for NRI.

    Plan to buy a new flat ASAP… Please advise…

    • Suresh says:

      Hi Savio, As per my knowledge, If the income is received first in India, it would be taxable in India irrespective of your citizenship status. The process remains same.

  100. Anuradha says:

    Hi Suresh,

    I have a 20*30 site in Mysore, if I will sell that site may be after 7 years for my son's education purpose, I have to pay income tax, at present am not paying any tax but I have a pan for the investment of sip. Can u pls guide me regarding this.

    Thanks in advance.

    • Suresh says:

      Hi Anuradha, You have two options 1) Sell the site before 3 years from the date on which you require money and invest them in bonds (Section 54EC ) in NHAI, REC etc., You would get 6% annual returns for 3 years and you can break them and you need not pay LTCG 2) You can sell them as and when you want and pay LTCG after indexation. Your investment in SIP would not have any impact unless you sell them during that time. If you sell, you need to pay tax as per the mutual funds taxation method which you have invested.

  101. Pushkaraj says:

    Hi

    Can capital gains from a residential apartment be invested in buying or constructing a farmhouse on agricultural land? Can it be used to buy a non agricultural land and construct a house – is there any restriction on the amount of land?

  102. Anuradha says:

    Hi, Suresh

    I have purchased a 20*30 site in Mysore in the year 2004, I want to sell it, the price is 16 lakhs and I want to buy a 30*40 site.  Please let me know that I have to pay income tax or not.  At present am not paying any Income tax. Recently I got a pan card, as I got to know about Sip through your blog, I wanted to invest in it 2000 per month. Thank you in Advance.

    • Suresh says:

      Hi Anuradha, if you read my article it indicates that once you sell property and save your money as per specific guidelines or invest in another property within stipulated time, you need not pay income tax on that.

  103. Revati says:

    Dear Suresh

    I’d appreciate if you clear my doubts.

    I have two properties in my name but held jointly with brother.
    Besides these one ancestral property would fetch 1 cr(50lacs to both brothers).
    And we have one flat for dda hopeful to be alotted next year by dda pending since 1983.

    The latter two properties would be classed as owned by us, that is my question.

    We want to sell one coowned flat at 17lac cap gain and sell ancestral property to buy 2 independent flats.

    What would be the ideal tax exemption plan?

    Is it first dispose one coowned and invest proceeds in nhai/rec.

    Dn sell ancestral n buy two properties(cos dda one is not currently available to be owned by us) so are we eligible to do that?

    • Suresh says:

      Hi Revati, You can sell two properties and buy one with the sale proceeds received. Also, regd your 2nd question, yes you can sell ancestral property and buy two seperate properties. However, pls read my article about the time limit and gudelines regd where to invest.

      • Revati says:

        Dear Suresh

        Thank you so much for instant reply.

        Is it so that you cant hold multiple properties and claim for exemption u/s 54 for capital gain tax exemtption. Is it so then what is the number of properties that you could have and still eligible for claim?

        The proceeds from ancestral properties can be invested in multiple/2 properties at two different locations?

        These are actual, two of my broader concerns/doubts.

        I will appreciate your feedback as per your comfort.

        Thank you.

  104. RAMASWAMY KETHARNATH says:

    I have more than two flats at Chennai. If I dispose one can I buy another to avoid Long Term Capital Gains Tax or the exemption is applicable only for ONE PROPERTY HOLDERS. Please clarify me on this subject..  

    • Suresh says:

      Yes Ramaswamy, you can still claim the exemption. Disposal value of two flats or the new property value which ever is less would be the exemption limit.

  105. Thanks for sharing these tax saving tips on long term capital gain. i like CGAS account & 54 EC Bonds ideas because these are great options to save tax.

  106. mohamed firdous says:

    What are the 54EC bonds available presently(22/12/12)how does one buy them

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