Spending rules for money received by property sell

- Assuming the land is not urban agriculture land.

- Against the sale of the land, you need to invest the amount of the net sale consideration in the house property to avail the exemption. The other option is to invest the amount in the bonds upto Rs. 50 lacs.

- Yes you can use the amount to pay off your home loans but in such as case, no exemption would be available and the entire capital gain would be taxable @20.8%. The amount used to pay for loan will be treated as gift by father.

- If you have plan to invest the amount in future then only you should open the Capital gain account.

It is the net sale consideration i.e. Rs. 1 lacs.

Dear Sir,

Hope you are doing well !!

1. If you do not get a chance to invest in a profitable property immediately and still want to save your long-term gains from being taxed, you can invest your capital gains in CGDAS by approaching any public sector bank. The timeframe for the purchase or construction of the property remains unchanged in this case as well. But you can utilise this account momentarily so that you save your gains from being taxed and have more time to finalise a property for reinvestment.

It is required to deposit such unutilised capital gain in the capital gains account before furnishing return of income but not beyond due date for furnishing return of income.

Normally, the due date of filing Income Tax return is July 31 for the previous Financial Year. Under extraordinary circumstances, it can be extended by the Finance Ministry.

2. Yes, you can be use for loan repayment but you wont get any exemption on the same.

Please note that in order to claim exemption, you need to invest the capital gain amount if a house property is sold. However, in case of sale of a land, entire sales consideration needs to be invested.

In case entire sale receipts are not invested, the exemption is allowed proportionately.
[Exemption = Cost the new house x Capital Gains/Sale Receipts]

Was it a compulsory acquisition and under which act was it acquired?

When was it sold?

If it was sold in FY 2019-20 then you can deposit the amount in capital gain account till 31.07.2020.

However if you wish to invest the capital gain amount in bond you need to invest it within 6 months from date of sale of land.

Since its land you need to invest entire sale consideration in purchase of flat to claim exemption and paying off house loan wont save capital gain. Even if you include your fathers name it wont save his capital gain as you need to use it while purchasing the house.

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

Thank you.

Hello,

1. From the date of compulsory acquisition, you have 2 years time to purchase the new house property or 3 years to construct the new house property subject to other conditions for exemption.

2. You won't get the deduction from capital gain for the same.

I hope this answer satisfies your requirement.

Regards,

CA Hunny Badlani

1. You need to spend that money within 2 years in case of purchase of new undertaking and 3 years in case of construction of new undertaking.

2. No, you and your sister cant use the money to pay off your loan.