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.
To purchase 2 years from date of sale which is over as of now and for construction 3 years from date of sale.
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Thank you.
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
Due to Covid situation, I am unable to purchase any residential plot, sale of residential home was done on 1st June, 2018 and capital gain amount submitted in Capital Gain Term deposit on 1 Aug, 2019 for a 1 year. This amount is now credited back to my Capital Saving Account. Since, I am looking for a plot now, expect this deal to be finalize by Jan, 21. Will construct this property in another 4 months till May, 21. 1. Will Govt. will allow to avail Long term capital gain Tax exemption as per above stated scenario. 2. Please guide: what should I do now to avail tax exemption.
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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
Since the construction of house will be completed within 3 years from date of sale exemption will be available.
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:
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.
Hi
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