A week back my father in law gifted a housing plot to my wife and we are going to sell it now. In such a situation what are the tax implications? Practically the property is in her possession for about three weeks. If proceeds are immediately invested in another apartment, won't there be any LTCG Tax?
1 Answers
Hi,
Your father-in-law gifting a plat to her daughter is a tax-free transaction.
Kindly read :
https://www.relakhs.com/gift-income-tax-rules-detailed-guide/
How to save Capital Gains Tax u/s 54F? (Conditions applicable to LTCG on sale of Land or Commercial Property)
Below conditions need to be satisfied in case you sell land and are planning to buy a residential home.
- You can use the entire sale proceeds (received by selling a plot / land) to buy a new house or to build a new residential house.
- If you use a part of the money, the deduction will be proportion of the invested amount to the sale price.
- The time-frame for investment is the same as that for capital gains from residential property.
- You should not own more than one residential house prior to this investment.
- The deducted capital gain (from sale of land) becomes taxable if you buy another house (other than the new one) within two years of the transfer of the original asset or construct a new one within three years.
- If the new house is sold within three years, the deduction claimed will become taxable as a long-term gain.
- This new house purchased or constructed must be situated in India.
- The proceeds should not be invested in a commercial property or in another vacant plot.
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