Residential property and Commercial property

Dear Sir,

Since the LTCG has to be invested in a residential property or in specified bonds, if you propose to reinvest the LTCG in a commercial property (which has always meant to be a commercial premise and not a residential property used for commercial purposes), you cannot claim the capital gain tax exemption. Accordingly, the entire LTCG shall be taxed at 20% plus applicable surcharge & cess.

You should invest for purchase of a new residential house for exemption.

If you have long term capital gain from sale of house property then for saving income tax you can buy residential property or to invest in NHAI / REC Bonds 

before reaching on canclusion please share exact dates and amount of sale purchase, improvements 

Hi

On sale of a property, capital gains are taxable. The capital gains can be long term or short term.

LTCG is taxable @20%. However, if LTCG amount is reinvested into a residential house property, there is an exemption from capital gains under section 54. 

There is no exemption from capital gains if investment is made in a commercial property and the capital gains become taxable.

Another option is to invest the capital gain amount in section 54EC eligible bonds. Please note that you need to invest the capital gain amount for claiming exemption from capital gains, remaining amount of sales consideration can be invested elsewhere.

Dear Sir,

Hope you are doing well !!

The new property should be residential house property to claim the benefit of exemption u/s 54.

Since the property is a commercial property, benefit of Section 54 shall not be available.

Capital Gain shall be computed by deducting from the sale consideration, expenses incurred wholly and exclusively in connection with sale and the cost of acquisition/cost of improvements (Indexation can be done for LTCG assets), the excess shall be taxed as Capital Gains.

The LTCG is taxable@20%.

However, you can claim the benefit of Section 54EC if you invest the sale LTCG amount in bonds of National Highway Authority of India or Rural Electrification Corporation.

Yes that's true if you sell a residential property then you can save tax only by investing it in another residential property u/s 54 of the income tax act otherwise you will have to pay tax @20% i.e. long term capital gain tax.

However you can save this by investing the capital gain amount in bonds mentioned u/s 54EC and remaining amount in commercial property.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

The capital gains would be sale price less the indexed cost of acquisition.  The cost would be the actual cost as incurred by you to buy that property. The gains so arrived at are taxable at 20%. Exemption from capital gains is available when the capital gains from the sale of house property are reinvested into buying another house property or specified bonds.  However, if you purchase commercial property this exemption is not available.

Hi

Exemption can not be claimed in case you invest be in commercial property.

Investment to be done in residential property only or in bonds .

Hope it helps

Yes you were advised correctly.