• Capital gain account

We sold an inherited residential house on 1st June, 2018 of worth : 1.2 CR, we deposited 52 lacks in capital gain account on 1st Aug, 2019. My question is as we sold property & yet not finalize any other property residential property till today
1. How much duration we have now to purchase a new property?
2. What kind of residential property we can purchase : a residential plot/ a flat/ Builder floor or any other with said amount of capital gain deposited on capital saving account.
Asked 3 years ago in Income Tax

To purchase 2 years from date of sale which is over as of now and for construction 3 years from date of sale.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement. You can even book phone consultation for further personal assistance.

Thank you.

Naman Maloo
CA, Jaipur
4271 Answers
97 Consultations

5.0 on 5.0

You have to either purchased residential house  within 2 year from the date of transfer of original capital assets or contruct within 3 year  that date

 

property must be residential use only can buy plot but have to construct the  house within stipulated time as above to avaul the exemption

Nitin Jain
CA, Jaipur
214 Answers

4.7 on 5.0

If you want you can book phone consultation or contact to discuss same in detail.

Naman Maloo
CA, Jaipur
4271 Answers
97 Consultations

5.0 on 5.0

Dear Sir,

 

As per the provisions of Income Tax Act, 1961, in case of depositing the sale proceeds of a property in the Capital Gain Account to save the Capital Gain Tax, then either of the condition must be completed:

- New Property (residential plot/ a flat/ Builder floor or any other) must be purchased with in 2 years from the date of sale i.e 31st May 2020. 

- Construction of property must be completed with in 3 years from the date of sale i.e 31st May 2021.

Now in your case, you purchased a land or under construction flat and construction will be completed with in 3 years from the date of sale i.e 31st May 2020 then you will not have to pay any capital tax to the income tax department.

 

Thanks and Regards 

Divya Chugh

Divya Chugh
CA, Noida
190 Answers
3 Consultations

5.0 on 5.0

Since the construction of house will be completed within 3 years from date of sale exemption will be available.

Ruchi Goel Anchal
CA, Gurgaon
525 Answers
16 Consultations

5.0 on 5.0

Hi

1. You won't get exemption on purchase of house property as To claim exemption under section 54, the taxpayer should purchase another house within a period of one year before or two years after the date of transfer of old house.

Under Section 54 the IncomeTax Act, an individual or HUF selling a residential property can avail tax exemptions from Capital Gains if the capital gains are invested in purchase or construction of residential property. Taxpayers such as partnership firms, LLP’s, companies or any other association or body cannot claim tax exemption under section 54.

The conditions that need to be satisfied to avail the benefit of the said section are as follows:

 

  • Asset must be classified as a long-term capital asset.
  • The asset sold is a Residential House. Income from such a house should be chargeable as Income from House Property
  • The seller should purchase a residential house either 1 year before the date of sale/transfer or 2 years after the date of sale/transfer. In case the seller is constructing a house, the seller has an extended time, ie. the seller will have to construct the residential house within 3 years from the date of sale/transfer. In case of compulsory acquisition, the period of acquisition or construction will be determined from the date of receipt of compensation (whether original or additional compensation)
  • The new residential house should be in India. The seller cannot buy or purchase a residential house abroad and claim the exemption.

 

The above conditions are cumulative. Hence, even if one condition is not fulfilled, then the seller cannot avail the benefit of the exemption under Section 54.
With effect from Assessment Year 2020-21 corresponding to FY 2019-20, a capital gain exemption is available for purchase of two residential houses in India. However, the exemption is subject to the capital gain not exceeding Rs 2 crore. Also, the exemption is available only once in the lifetime of the seller.

Karishma Chhajer
CA, Jodhpur
2450 Answers
29 Consultations

5.0 on 5.0

Hi

 

You can have a phone consultation for details discussion.

Karishma Chhajer
CA, Jodhpur
2450 Answers
29 Consultations

5.0 on 5.0

Ask a Chartered Accountant

Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
  Ask a CA