• Sold residential property amount

Hi Experts,

I sold one Residential property which was given by my father as gift.
I deposited in nationalized bank in capital gains.
I understand I have to purchase only Residential Property in 3 years - Please advise, 

1) can I buy open land or agricultural land or commercial property with that amount?
or
2) Only Residential Building?

Thanks in advance

Regards,
Kiran
Asked 6 days ago in Capital Gains Tax from Hyderabad, Telangana
Hi Kiran,

You can buy only residential property for claiming exemption.

Further, please note that you can buy property within 2 years and construct a property within 3 years.
Abhishek Dugar
CA, Mumbai
3456 Answers
156 Consultations

5.0 on 5.0

Hi Kiran,

The new property must be the residential property or you can buy land and construct residential house property.
The construction of residential house should be completed within 3 years.
Payal Chhajed
CA, Mumbai
722 Answers
2 Consultations

4.8 on 5.0

Hi Kiran,

- You should buy residential property only to avail exemption of capital gain within 2 years from the date of transfer.


Thanks
Vivek Kumar Arora
CA, Delhi
1421 Answers
31 Consultations

5.0 on 5.0

Hi Kiran,

To avail exemption, you can buy a residential property within 2 years or construct a residential property within 3 years from the date of sale.
Exemption is not available if you buy open land or a commercial property. Hope that clarifies.

Regards,
Nikhil
Nikhil Khanna
CA, Mumbai
1188 Answers
9 Consultations

5.0 on 5.0

Hi Kiran,

1. No, you can't. Considering of the property should be completed within 3 years from the date of sale.

2. There is no way you can avoid it until or unless you have capital loss in that year.
Abhishek Dugar
CA, Mumbai
3456 Answers
156 Consultations

5.0 on 5.0

Hi,

- You need to construct within 3 years otherwise you need to pay tax @20% along with the interest.Also no deduction u/s 80C is available.

Thanks
Vivek Kumar Arora
CA, Delhi
1421 Answers
31 Consultations

5.0 on 5.0

So the amount of capital gain kept in capital gain Account needs to be used either to purchase property within 2 years from sale or it should be used to construct residential property within 3 years of sale.
Even if you purchase an under construction building it will be considered as you are going to construct your house and limit of 3 years will apply.
However as you are saying it will take 4 years I would suggest you to atleast take an allotment letter or possession letter before completion of 3 years so that you can prove that the flat was under your possession and thus you can try to avoid the tax and that 20% is capital gain tax and not penalty.
You can try this but I guess income tax officer will ask for completion certificate from builder before 3 years.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
Naman Maloo
CA, Jaipur
284 Answers

5.0 on 5.0

1) No, you can not because the construction of residential house should be completed within 3 years.

2) Legally, you do not have any way to avoid penalty.
Payal Chhajed
CA, Mumbai
722 Answers
2 Consultations

4.8 on 5.0

Hello Kiran,

You will have to buy a residential house property only.

You can't buy an under-construction house which is getting completed in more than 3 years from the date of dale of old house 

If you fail to invest you will have to pay capital gain after adjusting for capital loss, if any.
Lakshita Bhandari
CA, Mumbai
2017 Answers
63 Consultations

5.0 on 5.0

Only residential property.
Karishma Chhajer
CA, Jodhpur
295 Answers
1 Consultation

5.0 on 5.0

1) No

2) No way to avoid penalty.
Karishma Chhajer
CA, Jodhpur
295 Answers
1 Consultation

5.0 on 5.0

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