Tax liability on sale of House

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adwaita asked 6 years ago

Hi sri, I am a follower of your blogs for long periods and find it helpful. I have sold my only house owned by me on 30th january 2020 for Rs 23 Lakhs. Towards brokerage I paid Rs 54k to an agent. I had bought that house for Rs 3.6 Lakhs on 10th May 2005. Now I have invested the entire selling amount in booking a new residential flat under construction and paid the CV in advance before 30th June 2020. I am working in a company and fall in the 10% tax bracket. Kindly guide me whether I need to show this in my tax returns? What would be my tax liability? Regards

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Sreekanth Staff answered 6 years ago

Hi, You can claim tax exemption on your gains. For tax calculations, suggest you to kindly consult a CA.

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Sreekanth Staff answered 6 years ago

Hi, You can show this transaction in ITR-2 form under Capital gains and can also claim exemption u/s 54. How to save Capital Gains Tax by claiming Exemption u/s Section 54? (Applicable to LTCG on sale of house property only) You can use the entire Long Term Capital Gain proceeds on sale of a residential house to buy another house property (residential property) to save Capital Gains tax. Below conditions need to be satisfied though;

The new house has to be bought one year before (under-construction property) the transfer of the first house or within two years after the sale. (For an Under construction property or flat , the construction has to be completed within three years of the transfer of the first property.)
The deduction allowed is equal to the actual investment or the capital gain, whichever is lower.
If you plan to use the gain to build a house, it has to be done within three years of the sale of the property. Do note that ‘cost of land’ can be included in the construction cost.

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adwaita answered 6 years ago

Hi sreekanth, Thanks for your prompt reply and guidance. Would be grateful if you advice on my tax liability on the current selling amount I.e. 23 Lakhs. I have invested the full amounts to the new house within 6 months. Do I have to pay any tax? The transaction didn't reflect in form 26A also. Please tell me as I do not want to file a wrong return? How much tax I need to pay now before filling the return? Jai Hind. Namaskaar.