hi,
there are three ways in which you can get capital gain exemption
if you planning to purchase another property or have already purchased one year back from the sale of the property then
under section 54:
The exemption under this section is only available to persons that satisfy the following conditions:
An individual or Hindu Undivided Family (HUF) that legally maintains ownership of the house property;
The house property is used only for residential purposes;
The house property is a long term capital asset, and was not transferred or sold within the first three years after the initial date of purchase or construction.
To claim the exemption, one must invest the proceeds derived from the sale of the house property into another residential house either within two years from the date of the sale or one year prior to sale, or one must invest in the construction of a new house within three years of the sale.
The exemption amount will be:
Equal to the amount of the capital gains if the cost of the new house property is greater than the capital gains; or
Equal to the cost of the new house property if the cost is less than the capital gains.
Meanwhile you can park your capital gain (full amount or utilized amount) in CGAS (Capital Gain Account Scheme)
This is only a stop-gap arrangement, as the funds have to be used to buy or build a house within the period specified.
The deposited money can be used only to buy or construct a residential house within the prescribed time frame.
If you withdraw funds from this account, they have to be used within 60 days.
If you do not utilize the amount within three years of the sale of the first property, such un-utilized amount will be treated as LTCG this will lead to taxation of the unutilized amount as long-term capital gain after three years of the sale of the first / original property.
The interest rates paid on these accounts are the same as those on regular savings and term deposits. Kindly note that interest earned on this account is taxable.
You can invest the capital gain amount in bonds under section 54EC:
Capital gains from sale of any long-term asset can be claimed as tax-exempt under Section 54EC of the Income-Tax Act by investing in notified bonds within six months of the transfer of Asset.
These bonds are issued by the Rural Electrification Corporation and the National Highways Authority of India.
The exemption is equal to the investment or the capital gain, whichever is lower. If you transfer or take a loan against these bonds within three years, the capital gain will become taxable.
These are redeemable after 3 years and must not be sold before the lapse of 3 years from the date of sale of the house property.
You are allowed a period of 6 months to invest in these bonds, but before the Income Tax Return filing date (to claim this exemption).
You can invest a maximum of Rs 50 lakh during a financial year in these bonds as per Budget 2015-16.
it does not matter if the property is old.
