• Claim long term capital gain tax benefit in purchase of new house

Saving of Capital Gain as of my case below:-
Sub:- Guidance For Saving of Long Term Capital Gain Tax
Sl No Property	Purchase Value Purchase Date   Sale Value	Sale Date	 Remarks
1	Land	700000 ( 7Lakh )	21-07-2009	2200000  21-09-2017      Capital Gain amount 
                                                                                                                          around 9 lakh 	
2	Flat	        17 Lakh	               10-07-2010	-	-	                      Outstanding Loan 2.5 
                                                                                                                         Lakh paid from 
                                                                                                                    sale proceed from  above

3	Flat	         38 Lakh	             17-02-2017   	-	-	           Loan from LICHFL  28 Lakh and 
                                                                                                           Personal Finance Rs 10 Lakh
 Issue : Saving of Long Term Capital Gains of Propery sold at Sl No 1 ( Around 9 Lakh on 21-09-2017) 
As per section 54 
Within a period of one year before or two years after the date of transfer of old house, the taxpayer should acquire another residential house or should construct a residential house within a period of three years from the date of transfer of the old house. In case of compulsory acquisition the period of acquisition or construction will be determined from the date of receipt of compensation (whether original or additional).
Question :- 
i)	Can I claim Long Term Capital Gain Tax rebate on property purchased on 17th Feb 2017 as per Section 54  i.e getting new property  before selling of old property 
ii) Purchased Property is Rs 38 Lakhs ( More Than sold property 22 lakh of plot) but Rs 28 Lakhs is loan from bank. Will it not be issue that purchased property minus loan amound is Rs 10 Lakh wherein Sold Value of Plot is 22 Lakh. Will i get complete rebate being purchased property more than sold property or only 10/22 ( Being Rs 10 Lakh Per finance and 22 Lakh Sold Property).
iii) On the day of Purchase flat on 17-02-2017, I was holding one flat , one plot in addition to new flat purchased , will plot  not be counted as residential property on 17-02-2017 . Means I was holding two residential house  on date of purchase of new house. Is Residential plot treated as residential house.
iii)  will  I get complete tax benefit in the above case even purchased for flat is with help of loan i.e 28 lakh loan plus 10 lakh from personal finance. Personal  Finance is less than sold value of plot ( RS 10 LAKH LESS THAN RS 22 lakhs sold value of plot)
Asked 6 years ago in Capital Gains Tax

Very short question.

Vivek Kumar Arora
CA, Delhi
4825 Answers
1030 Consultations

5.0 on 5.0

Hi

This sounds a little complicated. Please read the following carefully..

Since you have sold a land, section 54F comes into play for exemption for reinvestment. According to this section, you should not hold more than one residential house property at THE TIME OF TRANSFER. By transfer, it means sale of the land.

Where as, at the time of sale, you were already the owner of 2 flats. Hence, you cannot take benefit of this capital gain exemption and taxes will have to be paid.

All the other questions become immaterial after the above explanation.

Lakshita Bhandari
CA, Mumbai
5687 Answers
908 Consultations

5.0 on 5.0

Since you have sold a land and not a flat, section 54 will no be applicable to you. Applicable section will be 54F but since you own two flats already, you can't get benefit of this section.

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Hi,

Since you are already holding more than 1 residential property at the time of transfer, you will not be eligible for tax exemptions.

You will need to pay taxes.

Regards,

Nikhil

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

Hi,

Your answers as below:

i) Yes. Benefit of acquisition of property at Sl. No. 3 shall be available to you.

ii) Only cost of acquisition (irrespective of loan amount) is considered.

iii) Since you sold Land (which is not residential property) benefit u/s 54 shall not applicable but only u/s 54F. Such benefit u/s 54F is available only when you are not holding more than 1 residential property on the date of transfer of the property. (This is other than the property actually acquired)

iv) Yes, benefit shall be available in case of purchase from loan amount also.

Regards,

Sunny Thakral
CA, Delhi
224 Answers
8 Consultations

5.0 on 5.0

1.Yes ,you can claim tax benefit for purchase made on 17.feb 2017.

2.since you are claiming tax benefit under sec 54,no of property is irrelevant.

3.You have to invest full capital gain amount in order to claim tax benefit.

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

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