Capital gains investment

Hi

You may claim capital gain exemption by investing in a new residential house property. It could be a new ready to move in property, a resale property, an under construction property or you may buy a land and construct a residential house property on it.

If the investment is not done before date of return filing of ITR for FY 19-20 or 31st July 2020, whichever is earlier, you need to deposit the amount in CGDS account. If investment is done before only, no need to open account.

Since you have sold a house, only capital gain amount needs to be invested to claim capital gain exemption.

Since you have many queries, it is advisable to take a phone consultation to clear all doubts in one go.

Hello,

Yes, exemption u/s. 54 is available.

U/s. 54, Only Capital Gain amount is to be invested in another residential property. The investment can be made within 2 years for purchase or 3 years for construction of the house property. In case the amount is not invested till the due date of filing of the return, it can be deposited in the CGAS Account for exemption and in later 2/3 years can be invested. The exemption is available for residential property, it is n't compulsory that the property should be new. Advance payment to builder will qualify for the exemption. 

I hope that this answer satisfies your requirements. For further understanding, you can contact us directly at or take a phone consultation.

Regards,

CA Hunny Badlani

It would be advisable to take a phone consultation.

Yes you can get concession from capital gain according to your slab rate.

You can open a capital gain account before filing your return of income for that period.

You need to get valuation report from government approved valuer.

Yes you can purchase new house to save capital gain.

You can purchase new house within 2 year from sale or construct within 3 year of sale.

yes it will be considered as possession.

Only capital gain needs to be invested.

Yes you can invest before opening capital gain account.

Possession+ registry.

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

Thank you.

- If the capital gain amount is not fully utilized before the filing of ITR then capital gain account should be opened and capital gain should be deposited in it.

- Yes you can purchase or construct residential house or invest in bonds. 

- Time limit for purchase is 2 years from the date of sale, for construction it is 3 years from the date of sale. For investment in bonds, it is six months from the date of sale. For bonds, Feb.2020 is the last month for investment.

- Capital gain amount needs to be invested in new residential house.

- Amount should be utilized before filing of ITR and asset should be created within the period specified above.

- Advance payment to builder is eligible for exemption.

Dear Sir,

Hope you are doing well !!

There are numerous slabs and sections under which you can save on tax if you reinvest your long-term capital gains.

Section 54: Under this section, you can avoid tax on capital gains from the sale of a house property if you reinvest the money to buy another property. You can claim tax exemptions under this section if you buy the new property one year before the sale or two years after the sale. In case it is under construction, the new property should be ready within three years of the old property’s sale.

Section 54EC: You can claim tax exemption by using the amount you gain from selling an asset to buy bonds issued by NHAI and REC.The bonds should be bought within 6 months of the sale of the asset. The maximum amount you can invest in this way is Rs. 50 lakh. It will lock your money for 5 years.

Section 54F: You can claim total tax exemption by using the money you gain from selling any asset (except a house property) to buy a house property, which needs to be bought one year before the sale or two years after thse sale. For under-construction properties, the new property should be ready within three years of the asset’s sale. 

Capital Gains Account Scheme (CAGS):  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.

It is advisable to take a phone consultation for detailed discussion.