Your advice on sale of my flat in New Delhi by 30-4-2019

Dear Sir,

Hope you are doing well !!

NRIs who are selling house property which is situated in India have to pay tax on the Capital Gains. The tax that is payable on the gains depends on whether it’s a short term or a long term capital gains.

When a house property is sold, after a period of 2 years (Reduced from 3 years to 2 years in Budget 2017) from the date it was owned – there is a long term capital gain. In case it held for 2 years or less – there is a short term capital gain.

Tax implications for NRIs are also applicable in the case of inheritance. In case the property has been inherited, remember to consider the date of purchase of the original owner for calculating whether it’s a long term or a short term capital gain. In such a case the cost of the property shall be the cost to the previous owner.

For capital gain calculation, we need the complete details regarding properties.

Long term capital gains are taxed at 20% and short term gains shall be taxed at the applicable income tax slab rates for the NRI based on the total income which is taxable in India for the NRI.

NRI are allowed to claim capital gain tax exemptions under section 54, 54F and Section 54EC on long term capital gains from sale of house property/any capital asset other than a residential house property in India.

So, you can save taxes by reinvestment as per section 54, 54F and Section 54EC.

If you need any further assistance, please let me know.

Hi,

You can save capital gain tax by investing the money (capital gain amount) in any of the following:

1. REC/NHAI bonds within 6 months from the date of sale of house (max. 50 lacs). Such bonds shall be redeemable after 5 years.

2. Investing in another house property in india within 2/3 years.

Hi,

The income tax laws give various options to the NRI, to save the tax liability arising from the sale/transfer of long-term capital gains, if certain investments are made.

• 
  Section 54 exempts long-term capital gains tax, arising on the sale of a residential house, if the indexed capital gains are invested in the purchase or construction of another residential house, within the specified period.You can purchase this property either one year before the sale or 2 years after the sale of your property. You are also allowed to invest the gains in the construction of a property, but construction must be completed within 3 years from the date of sale.

• 
  Section 54EC allows an exemption upto Rs 50 lakhs, from long-term capital gains tax, if the indexed capital gains are invested in government-notified bonds within six months of transfer of assets.These are redeemable after 5 years and must not be sold before the lapse of 5 years from the date of sale of the house property.

Hi,

- Against sale of residential house, you need to invest long term capital gain in the below options.

1) Purchase of new residential house property within 2 years or construct within 3 years from the date of transfer.

2) Invest in to specified bonds within 6 months from the date of transfer.

Thanks

Since you and your son both were co-owner his share of capital gain would be taxed in his wives name as she should be the legal heir of your son's property.

So you need to first calculate capital gain and share of both the parties in capital gain and then you can save tax by investing the capital gain amount in another residential flat within 2 years or constructing one within 3 years or investing in bond's u/s 54EC within 6 months from sale but only upto 50 lakh.

If you any further assistance in calculation you can contact me.

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

Thank you

Hello Sir,

To save taxes on the long term capital gains, relief under section 54 of the income tax act shall be available on fulfilling the following conditions:

1. Purchase/Construction of new residential house property situated in India

2. Purchase should be done either 1 year before the sale or 2 years after the sale.

3. Construction should be completed within 3 years of the sale transaction.

4. Only ONE house property should be purchased or constructed.

5. To claim full exemption, entire capital gains should be invested.

4. If you are not able to invest the amount before the due date of tax filing, then deposit the capital gains in CAPTAL GAIN ACCOUNT SCHEME with the public sector banks.

5. Please note that the new property purchased for claiming exemption should not be sold within 3 years from the date of its purchase, otherwise the exemption will be reversed in the subsequent year.

Thanks !

Damini

When a house property is sold, after a period of 2 years (Reduced from 3 years to 2 years in Budget 2017) from the date it was owned – there is a long term capital gain. In case it held for 2 years or less – there is a short term capital gain.  The capital gains will be taxable in your hands and in the hands of the legal heir of your deceased son in the share of ownership.

Also, you can save the tax on your long term capital gains by investing them in certain bonds. Bonds issued by the National Highway Authority of India (NHAI) or Rural Electrification Corporation (REC) have been specified for this purpose. These are redeemable after 3 years and must not be sold before the lapse of 3 years from the date of sale of the house property. Note that you cannot claim this investment under any other deduction. You are allowed a period of 6 months to invest in these bonds – though to be able to claim this exemption, you will have to invest before the return filing date. The Budget for 2014 has specified that you are allowed to invest a maximum of Rs 50 lakhs in a financial year in these bonds.