Dear Srikanth ji,
Please clarify my confusion and guide me if any alternatives.
which of following alternative is legal
I want to purchase a old house for 2Cr jointly with my wife out of my retirement, GPF benefit and our savings in bank FD.
1. if my wife sell her site for 80lakh after 3 months from the purchase date can we get Long term exemption.
2. Can I use capital gain to upgrade the newly purchased old house . Do I need to demolish and re-build again.
3. do I need to pay capital gain amount to builder in full payments or in installments
4. If I borrow money from my relative or bank loan can it be repaid using capital gain amount.
5. OR we need to adopt sell first and purchase next. It there any minimum time gap between two.
eagerly waiting for the best solution
1 – Yes, exemption can be claimed u/s 54.
“As per Section 54 of Income Tax Act, any long term capital gain arising from the sale of a residential property shall be exempt to the extent such capital gain is invested in the purchase of another residential property within one year before ortwo years after the due date of transfer of the property sold or construction of residential house property within a period of three years from the date of transfer/sale of property.”
2 – I believe that there is no tax exemption on capital gains spend on renovating house.
Since, the requirement under this provision is to buy or construct a house, the amount spent on renovation of the existing house will not be allowed covered under Section 54. However, if any new construction is done in this house like construction of another floor, it could be allowed as an investment under this provision.
3 – I couldn’t understand your query..kindly rephrase it!
4 – Kindly go through this article @ Can you take a Home Loan and also Claim LTCG Tax Exemption on Sale of Real-Estate Property?
5 – Kindly read ;