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
VIJAYKUMAR
3 Answers
Dear Vijaykumar,
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 ;
Dear Sreekanth,
Many thanks for quick answer
Appologies for question calarity.
I will reprase the question
we initiated purchse of a old house for Rs 2Cr on 4th Dec 2018
All our saving in white comes to 1.5Cr.
We also initiated to sell out site for 80 Lakhs on 5 Feb 2019
I understand if site transaction is completed first then we can
adjust captial gain from site sale in purchase of old house.
House seller is demanding to getting it registered by end of Feb
2019 as 3 months is getting over. If not agreement will be
canceled.
Now problem is site sale money may not be availabe with in Feb2019.
If I register by borrowing 50 Lakhs from friends relative or bank and
to repay them after I got back the site money of 80Lakhs will be
legal to claim capital gain.
Can I relate this transaction as 1 year earlier and 2 year later wrt
to purchase of old house with capital gain due to sale of my site after purchase of old house.
If not I am sure that site money can be utilized for building a new
duplex house.
Please tell the method to provide the house bulilding expenditure
account both in case of labour contract or full construction
contract. should I go for reputed building constructor or just keep
all the building construction related transcation bills as a proof of construction to be submitted
as document to save captital gain.
Sorry of long explanation. Hope you get clarity on my tranaction. one last thing. To purchase old house katha in the present owner is must during registration. Can I do aggrement and wait till current owner gets katha.
with regards
Many thanks for quick answer
Appologies for question calarity.
I will reprase the question
we initiated purchse of a old house for Rs 2Cr on 4th Dec 2018
All our saving in white comes to 1.5Cr.
We also initiated to sell out site for 80 Lakhs on 5 Feb 2019
I understand if site transaction is completed first then we can
adjust captial gain from site sale in purchase of old house.
House seller is demanding to getting it registered by end of Feb
2019 as 3 months is getting over. If not agreement will be
canceled.
Now problem is site sale money may not be availabe with in Feb2019.
If I register by borrowing 50 Lakhs from friends relative or bank and
to repay them after I got back the site money of 80Lakhs will be
legal to claim capital gain.
Can I relate this transaction as 1 year earlier and 2 year later wrt
to purchase of old house with capital gain due to sale of my site after purchase of old house.
If not I am sure that site money can be utilized for building a new
duplex house.
Please tell the method to provide the house bulilding expenditure
account both in case of labour contract or full construction
contract. should I go for reputed building constructor or just keep
all the building construction related transcation bills as a proof of construction to be submitted
as document to save captital gain.
Sorry of long explanation. Hope you get clarity on my tranaction. one last thing. To purchase old house katha in the present owner is must during registration. Can I do aggrement and wait till current owner gets katha.
with regards
Hi,
Yes, I believe that you can take a loan, buy a house and then can sell the plot and claim back LTCG exemption.
Related article :
Can you take a Home Loan and also Claim LTCG Tax Exemption on Sale of Real-Estate Property?
My suggestion would be to consult a Chartered Accountant in this regard.
I have purchase a house for 148 lakhs jointly with wife in Nov2019 I invested my retirement benefits and saving.
After 10 month in Sep 2020 I have sold my flat for 48.75 lakhs. Can I use this lcapital gain for claiming the tax saving as it was BUY first with out any outstanding loan, and SELL later with in 1 year.
Even If this is acceptable can I build a new house in my site for 50 Lakhs. some one said that If I construct a new house with in in three years , capital gain saving will be canceled. Other said is it applicable only to 84F case not for section 84.
Please clarify
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