I sold a residential property for 43 lacs and purchased a residential property for 70 lacs. Both the transactions were done in the month of April' 2018. I have availed LONG TERM capital gains. I want to sell this property now and want to know what will be the tax implications. In order to avoid Short OR Long Term Capital Gains, is it advisable to sell it NOW or at some LATER date? My objective is to save tax and that is the reason I have posted this query.
Hi
If you sell this new property, it would be STCG.
Further, the actual cost of acquisition shall be reduced by the amount of exemption claimed for LTCG on sale of old property for arriving a cost of acquisition for capital gain purposes. (To sum up, exemption claimed earlier shall be reversed)
The exemption shall not be reversed if the property is sold after April 2021.
Please share your intent to sell, do you want to reinvest the funds or utilize it for other purposes?
Dear Sir,
Hope you are doing well !!
The exemption claimed in 2018 will be reversed if you sell this new property within 3 years of purchase and capital gains from the sale of the new property will be taxed as short-term capital gains.
It is advisable to hold the new property for 3 years.
Hello,
If you sell this property now, your earlier claimed LTCG exemption will be reversed, it would reduced from the cost of acquisition of the property while calculating the capital gain from sale of this property and capital gain on sale of this property would be STCG.
To save capital gain, you must hold the property for 3 years.
I hope this answer satisfies your requirement.
Regards,
CA Hunny Badlani
If you had claim capital gain exemption while purchasing this 70 lakh property then if you sell it now first the cost of the property would be reduced by the capital gain claimed exempt earlier and you will have to pay capital gain on remaining amount and it will be short term capital gain.
If you dont want the above thing to happen kindly hold this property for 3 years and then sell it.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
Suppose there is NO difference of cost between the property we HAD PURCHASED and the property we intend to BUY NOW (say next month itself), shall we still have to pay any tax? If yes, then how much amount would that be?
If after selling this property you are again going to purchase a new flat of same amount then you wont have to pay any capital gain tax.
- If the new house property is transferred within 3 years from the date of purchase then capital gain will be short term capital gain and chargeable to tax as per normal rates. The amount of exemption would be reduced from the cost of new house.
- Instead of selling it, avail the loan on it and purchase the new property.
No, you will not have to pay any tax if there is NO difference of cost between the property you HAD PURCHASED and the property you intend to BUY NOW.
Payal, Point noted that I don't have to pay any tax if I sell this home and buy other one at same cost. But I have already availed Low Cost Capital Gains in respect of earlier flat sold and this one purchased (where I stay as of now). Will THIS AMOUNT not get reversed ?
exemption would be reversed irrespective of same cost. The cost of new property to be purchased is nowhere linked to cost of the new property already purchased. Gain would be short term capital gain plus long term gain on sale of old property which will be taxable at normal slab rate.
Yes, the exemption amount would be reversed.
You need to pay the taxes on LTCG already claimed as per applicable slab rate.
Yes, you would still be liable to pay tax.
As I had mentioned above that the gain which you had calculated earlier and claimed as exempt will be get reduced from cost while calculating capital gain of this property but since you are buying a new property of same value i.e. 70 lakh you will not have to pay capital gain.
If you need to clarify further you can have a consultation over call
Hi
No. The exemption shall not be granted since it would be STCG. There are no exemptions for STCG.
If the property is sold after April 20, it would be LTCG. Though the LTCG amount would be high as earlier capital gain exemption would be reversed but if you are reinvesting in another property, exemption shall be provided.
Please note that for the purpose of LTCG / STCG, relevant proof of holding is 2 years.
But, for the purpose of section 54, it is 3 years I.e. once exemption has been claimed for reinvestment in a new property, that new property must be held for 3 years.