LTCG tax exemption by purchasing of plot and construction on it

- Yes you can purchase the plot after 08.06.2021 but construction should be completed before 08.06.2022. For construction purpose, crucial date is 08.06.2022. Construction should be completed within 3 years from the date of sale of the property.

Hello,

To claim exemption from LTCG under sec 54, the new property must be either constructed within 3 years or purchased within 2 years from date of sale. Given by the facts of your case, you must buy the plot and complete construction together by Jun 22.

Best Regards, 

Hi

Can i use 25 lacs in purchasing a residential plot and remaining 10 lacs in construction of house on the plot. - YES


If yes, can I purchase that plot after 08/06/2021 (late purchasing due to lockdown) and construct house before 08/06/2022 - YES

Hi

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.

Therefore yes you can do so.

Please have a phone consultation for details discussion.

Dear Sir,

Hope you are doing well !!

1. Yes, you can use 25 lacs in purchasing a residential plot and remaining 10 lacs in construction of house on the plot.

2.Yes.

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.

Yes, you can do so. You can buy plot for entire 35 lacs and then construct house on it before June 2022 by your own savings/loan.

- Yes you can use long term capital gain fully for purchase of plot and do construction from loan or savings.

Hi

Yes you can use.

Yes, you can do that.