How to save Capital Gains Tax on Sale of Land / House Property?
Capital assettypically refers to anything that you own for personal or investment purposes. It includes all kinds of property; movable or immovable, tangible or intangible, fixed or circulating.
Examples include a house, land, household furnishings, stocks, bonds or mutual funds held as investments etc.,
When you sell a capital asset, the difference between the purchase price of the asset and the amount you sell it for is a capital gain or a capital loss. Capital gains and losses are classified as long-term or short-term.
If Land or house property is held for 36 months or less24 months or less(w.e.f. FY 2017-18)then that Asset is treated as Short Term Capital Asset. You as an investor will make either Short Term Capital Gain (STCG) or Short Term Capital Loss (STCL)on that investment.
If Land or house property is held for more than 36 monthsmore than 24 months(w.e.f FY 2017-18 / AY 2018-19) then that Asset is treated as Long Term Capital Asset. You will make either Long Term Capital Gain (LTCG) or Long Term Capital Loss (LTCL) on that investment.
You may have to pay Capital Gains Tax on STCG / LTCG.
In this post let us understand – How to calculate Short Term capital gains on sale of land or property? How to calculate Long Term Capital Gains on sale of land or house? What are the applicable capital gain tax rates on sale of land / house property? How to avoid / save / minimize capital gains tax on sale of land or flat?
How to calculate Capital Gains on sale of Land or House property?
Short Term Capital Gains Calculation is calculated as below:
STCG = Total Sale Price – Cost of acquisition – expenses directly related to sale – cost of improvements.
Long Term Capital Gains Calculation;
The LTCG calculation is similar to STCG. The only differences are, you are allowed to deduct Indexed Cost of Acquisition/Indexed Cost of Improvements from the sale price and also claim certain exemptions to save capital gains tax.
With effective from Financial Year 2017-18, the base year for calculation of Indexation is going to be 2001.
(Indexation is done by applying CII – cost inflation index. This increases your cost base ie purchase price and lowers your gains. Your purchase price is adjusted for the impact of inflation.
How do you calculate the indexed cost of purchase? The indexed cost is calculated with the help of a table of cost inflation index.
Divide the cost at which you purchased the Property by the index as on the date of the purchase. Multiply this by the index as on the date of sale.
For Example : If purchase year is 2011 and year of sale is in Financial Year 2015. Then indexed cost of purchase would be –
Below is the Cost Inflation Index Table from 2001-02 to FY 2020-21 for your reference. Cost Inflation Index (CII) for FY 2020-21/ AY 2021-22 Notified by CBDT at 280.
What are the applicable Capital Gains Tax Rates on Sale of Property AY 2021-22?
Short Term Capital Gains are included in your taxable income and taxed at applicable income tax slab rates.
Long Term Capital Gains are taxed at 20%.
How do I save Capital Gains Tax from sale of Property?
Capital gains tax on Short term gains is unavoidable and no exemptions are available to minimize your tax liability. However, you can claim deductions to lower the tax liability on long-term gains.
How to save Capital Gains Tax by claiming Exemption u/s Section 54EC? (Applicable to LTCG only, on sale of both land / house property / commercial property)
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. The Bonds issued u/s 54EC for saving of LTCG on sale of property will now have a lock-in period of 5 years instead of 3 years from FY 2018-19.
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 lakhduring a financial year in these bonds as per Budget 2015-16.
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.
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 propertyor in another vacant plot.
How to Save Long Term Capital Gains Tax without buying another House Property?
If you are unable to invest the sale proceeds in any of the above options before the date of income tax returns filing , you can deposit the CAPITAL GAINS (not entire sale proceeds) amount in a public sector bank or other banks as per the Capital Gains Account Scheme- CGAS, 1988.
The capital gain (full amount or utilized amount)can be deposited in CGAS account.
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.
How to Save Long Term Capital Gains Tax under New Section 54GB(5)?
Under Section 54GB(5) of the Income Tax Act, 1961, long term capital gains on the sale of residential property will be exempt if the sale proceeds are invested in a eligible startup, provided such transfer took place prior to March 31, 2019. As per the latest full Budget 2019-20, this has now been extended to March 2021.
Important points on Capital Gains Tax & Sale of Land / Home
Agricultural land in a rural area in India it is not considered a Capital Asset, and therefore no capital gains are applicable on its sale.
While calculating capital gains, expenses related to transfer / sale like advertisement expenses, brokerage expense, Stamp duty, Sale deed registration fees, Legal (lawyer) expenses etc., can be deducted from the Purchase price.
Sale of a property that is inherited or accepted as a gift will also attract capital gain/loss provisions even though you haven’t spent any money to acquire it. In such a case, capital gains will be computed on the basis of the cost to the previous owner, indexed to the year of purchase.
If the cost of the new residential property is lower than the total sale amount, then the exemption is allowed proportionately.
The new property must only be bought on the name of the seller and not on anybody else’s name. Joint ownership can be acceptable but exemption can be limited to the share of ownership.
You must also remember that you are allowed to purchase or construct only one new asset from the capital gain that accrues. This means that you cannot make multiple property acquisitionsand thus seek to reduce your tax outgo. However, if you sell more than one property, you can invest the resulting cumulative capital gain amount in a single new property.
If you use the capital gain amount to clear loansthen tax on LTCG cannot be saved. No exemptions can be claimed.
Capital Gain Tax cannot be saved if the sale proceeds are invested in a commercial property, agricultural land or plot.
According to the latest amendments in the Income Tax Act, the residential property which is bought by re-investing the long-term capital gains must be situated in India.If you would like to buy a property outside India say in the US, you need to pay tax on the capital gain portion of the sale proceeds.
Categorize your capital gains i.e., Short term or Long term.
Calculate Short Term Capital Gains (STCG) / Long Term Capital Gains (LTCG).
If you have STCG, taxes are payable as per your income tax slab rate.
If you have LTCG, to save capital gains tax ;
You may invest the gains in another Residential property (or)
Buy Notified Bonds (or)
Temporarily invest in Capital Gains Account Schemes.
Else, you have to pay 20% on your Long Term Capital Gains.
Calculation of Capital Gains Tax on sale of property can be sometimes be a tricky one. It is advisable to exercise caution when claiming Capital Gains Tax Exemptions. When in doubt, kindly consult a tax expert or a Chartered Accountant.
(Image courtesy of Stuart Miles at FreeDigitalPhotos.net)
This post was last modified on September 28, 2023 6:32 pm
Sreekanth Reddy
Sreekanth is the Man behind ReLakhs.com. He is an Independent Certified Financial Planner (CFP), engaged in blogging & property consultancy for the last 14 years through his firm ReLakhs Financial Services . He is not associated with any Financial product / service provider. The main aim of his blog is to "help investors take informed financial decisions." "Please note that the views given in this Blog/Comments Section/Forum are clarifications meant for reference and guidance of the readers to explore further on the topics/queries raised and take informed decisions. The information provided, therefore, should not be viewed as financial, legal, accounting, tax or investment advice."
Greetings! I have a Query and need your guidance.I bought a flat in 2010-2011 for which i took a home-loan for 36 lac and paid 14 lac from my savings to builder as down payment. Till date i have paid 33 lack (Interest+ some part payments) and when checked with bank today they say that i have 20.5 lac of principle outstanding . I am paying emi of ~39000 per month as still i have 71 months due
1)Assuming i sell this flat for 77 lac this year where transfer expense is ~1lac and home improvemnet cost is ~2lac, gross long term capital gain goes in negative...I am not sure if i am missing something in calculation.Can you please help to calculate based on the above said variable.
2) Can i add up the total interest paid on home loan against transfer cost but i have availed income tax benifit till now.
3) once i sell the Property say for 77 lac can i use the money for other investment options(FD+bondsMF) rather than buying a home again.What will be the tax implication if i am not investing in purchasing a home.
4) Need your advice personally....which is beneficial...whether to sell this house and buy a flat again or to use the money for other investment options like FD etc...
If i don't invest again in buying a flat i will save the emi of ~ 39000 plus the interest that i may receive by investing the lump-sum amount~ 50 lac post paying the outstanding loan amount to bank and be loan free.
Thanks in advance. This blog is really good and thanks so much for your effort and time spent in providing clarity.
Dear eswar,
1 & 2 : There have been few court judgments in favor of claiming both tax benefits & as part of cost of acquisition regarding interest payments (borrowed capital) on home loan. So, your understanding is correct.
3 - You can invest in FDs/MFs, but no exemption can be claimed on LTCG.
4 - You are the best person to take investment decision based on your requirements :)
Have you adequately invested or planned for your other financial goals?
Sir,
I had constructed house in my native place in 08/1993 at a cost of Rs 330000/- . Now i am selling the same in 04/2017
at Rs 5800000/-. How to calculate LTCG as per latest budget.
Request your help.
Raj.K
Dear Phani,
As per budget 2017, the base year for calculation of Indexation is going to be 2001. This is the only change that is applicable to your case.
The calculation procedure is as given under the heading 'Long Term Capital Gains Calculation' in the above article.
Suggest you to take help of a CA and work out calculations.
Hi - I have purchased a flat in Hyd in 2006 for 15 Laks.
Later i moved to Bangalore & purchased one more flat in Blr for 60 Laks with Housing Loan of 50 laks. I have occupied & staying in my Blr flat from 2015 June.
Now i want to sell my Hyd flat for 40 laks & pay 30 laks amount towards my Bangalore property House Loan as part payment towards Principle.
Can i claim Wealth tax exemption for the 30 laks part payment done to my 2nd Housing Loan.
Dear Manjunath ..Kindly note that wealth tax has been abolished.
Hi Srikanth
Thanks for your input. I misunderstood capital gain to wealth tax.
What about capital gains tax in this situation. Will I be able to get exemptions when I pay the part payment to my existing loan.
Dear Manjunath ..There is no provision to claim exemption on LTCG by using the proceeds/gains to close home loan.
Hi,
I am planning to buy two shops (commercial property) in next one month. I have to make a down payment of 30% of the total value of the property, for which I am planning to avail a loan. I need to pay 70% of the value at the time of possession which is after 3 years. To pay 70% of the amount, I am planning to sell one shop and make the payment for the other shop from the sale proceeds.
1. Can you please through some light, how can I save LTCG in this case.
2. Am I eligible to make the payment for one shop from the proceeds of another. If I do so, is there any way in which I can still save LTCG. or do I have to invest the entire proceeds in residential property to save LTCG.
Many Thanks in advance.
Dear Shilpi,
In how many years after acquisition, you are planning to sell one of your properties?
Are you planning to take loan for buying two properties, I am bit confused with your query.
If you taking loan then you need to close one of the loans to sell one property, am I right?
Also, the proceeds should not be invested in a commercial property, need to be invested in a Residential property only.
Thanks Sreekanth for your reply.
I will get possession in around 3 years or 3.5 years max.
I need to pay 30% of the total value now and rest 70% at the time of possession. So I am taking loan for both the properties but only for 30% of the total value. So suppose two shops are of 20 lacs each. Hence, I will take loan of 12 lacs only (30% of 40 lacs). I am planning to sell one shop at the time of possession. With the total amount received from the selling, I am thinking to pay off my loan (12 lacs) and also pay the rest 70% for one shop ( 70% of 20 lacs = 14 lacs). is it possible for me to do this?
Since I have to invest the proceeds in residential property, is there any way out by which I can pay atleast 14 lacs (70%) at the time of possession and save LTCG tax also.
Dear Shilpi,
It may all depends on what is the selling price that will fetch on your property that you are going to sell :)
Suggest you to consult a CA in this matter (for tax calculation purposes).
main 40 lakh main apna flate sale kar raha hun muje kitna tax chukana hoga
Dear sushil.. Kindly visit this link and you may use the available calculator..
Sreekanth,
Great job from your side. I have a query.
I read somewhere this and wanted to know your confirmation:
Tthe exemption of LTCG Tax when you sell an existing property and buy a new one is only valid when you have 1 residential property.
Details --> I have existing 2 house property. Sell one and and use this Capital Gain to give down payment of a new flat from this proceed.
So will I get LTCG exemption in this case?
Regards,
Manav
Dear Manav ..Could you plz share the link for this??
Dear Manav,
The link is regarding Section 54F.
W.r.t 54F, even I have mentioned in my article that one should not own more than one residential house prior to new investment.
However, in your case, its two house properties (and not Plot/Land), so Section 54 is applicable and not Sec 54F.
Thanks.. these sections are confusing for first timers :-)
Need experts like you to demystify it...
I purchase a land in 1988 for Rs. 35000/-
In 1989 i constructed a ground floor house for rs. 75000/-
In 2012 i started renovation of the building and constructed 5 house in 3 floors which completed in 2014.
i Took loan of 60Lacks for construction.
In Oct 2016 i sold Entire land and bulding for 1.6Cr
How to calculate Capital Gains?
Dear krishna ..Kindly consult a CA and get this calculated.
Hi Sreekanth,
Let me first thank you for making Relakhs.com quite an insightful website covering wide variety of financial aspects.
We are residing in a flat in Mumbai purchased in 2003 on my name with ongoing home loan.
In 2013, I and my wife jointly purchased another flat again on loan in my native Mangalore, which is still under construction. Completion date was end of 2015 but the project has been delayed and may take 2 to 3 years more for completion. ( honestly i dont know given the circumstances and trying to get out of this)
Also my Wife owns a small land in my native which was gifted by her father abt. 2 years back.
My plan is to sell the Mumbai Flat and to migrate to my native and build a house on the land which is in my spouse’s name.
Now my question is what are the different scenarios & implications with recent 2017 revisions on property transactions and second house purchase as in my case and how best I can save on LTCG on sale of Mumbai House property.
1. Can I combine the benefits of building a house in aforesaid land, as well as investing 50 lacs in Govt. Infra. Bond..?
2. Is there any implication on the flat we purchased which is still under construction..?
3. Can I add entire EMI component of the loan or only interest part while arriving at indexed cost of Mumbai flat..?
Any inputs on this regard are appreciated.
Regards.
Jai.
Dear Jaikishen,
There are two amendments in Budget 2017 wrt to LTCG on immovable property.
Holding period for LTCG is 2 years only from AY 2018-19 onwards and the Loss under the head 'Income from house property' will be limited to Rs 2 Lakh only.
Read: Important Direct Tax proposals in Budget 2017.
I believe that you can use the LTCG for Construction of house on plot but within 3 years from the date of sale of property. You may also invest the balance (if any) in Bonds.
Regarding Under-construction property , kindly go through this article..
You can consider only Interest portion of EMIs towards Cost of Acquisition.
As there are multiple transactions involved in your case, suggest you to consult a CA.
Thanx Sreekanth.. much appreciated.
Regrds.
Jai.
please read the Rs.25 lakhs instead Rs.20 lakhs of sale of plot
Dear pandu,
Yes, She 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.
As it is an Under-construction flat , the construction has to be completed within three years of the transfer of the first property.
My wife has sold (for Rs.20.00 lakhs)her plot 425 sqyrds in 2016 which was purchased in the year 2002(for 2 lakhs) for a profit of Rs.23.00 Lakhs and want to invest in buying a Flat under construction in 2017.(off course the flat cost is Rs.75.00 lakhs)
Please tell me this would attract any long term capital gains????
View Comments
Hi Sreekanth,
Greetings! I have a Query and need your guidance.I bought a flat in 2010-2011 for which i took a home-loan for 36 lac and paid 14 lac from my savings to builder as down payment. Till date i have paid 33 lack (Interest+ some part payments) and when checked with bank today they say that i have 20.5 lac of principle outstanding . I am paying emi of ~39000 per month as still i have 71 months due
1)Assuming i sell this flat for 77 lac this year where transfer expense is ~1lac and home improvemnet cost is ~2lac, gross long term capital gain goes in negative...I am not sure if i am missing something in calculation.Can you please help to calculate based on the above said variable.
2) Can i add up the total interest paid on home loan against transfer cost but i have availed income tax benifit till now.
3) once i sell the Property say for 77 lac can i use the money for other investment options(FD+bondsMF) rather than buying a home again.What will be the tax implication if i am not investing in purchasing a home.
4) Need your advice personally....which is beneficial...whether to sell this house and buy a flat again or to use the money for other investment options like FD etc...
If i don't invest again in buying a flat i will save the emi of ~ 39000 plus the interest that i may receive by investing the lump-sum amount~ 50 lac post paying the outstanding loan amount to bank and be loan free.
Thanks in advance. This blog is really good and thanks so much for your effort and time spent in providing clarity.
Dear eswar,
1 & 2 : There have been few court judgments in favor of claiming both tax benefits & as part of cost of acquisition regarding interest payments (borrowed capital) on home loan. So, your understanding is correct.
3 - You can invest in FDs/MFs, but no exemption can be claimed on LTCG.
4 - You are the best person to take investment decision based on your requirements :)
Have you adequately invested or planned for your other financial goals?
Sir,
I had constructed house in my native place in 08/1993 at a cost of Rs 330000/- . Now i am selling the same in 04/2017
at Rs 5800000/-. How to calculate LTCG as per latest budget.
Request your help.
Raj.K
Dear Phani,
As per budget 2017, the base year for calculation of Indexation is going to be 2001. This is the only change that is applicable to your case.
The calculation procedure is as given under the heading 'Long Term Capital Gains Calculation' in the above article.
Suggest you to take help of a CA and work out calculations.
Hi - I have purchased a flat in Hyd in 2006 for 15 Laks.
Later i moved to Bangalore & purchased one more flat in Blr for 60 Laks with Housing Loan of 50 laks. I have occupied & staying in my Blr flat from 2015 June.
Now i want to sell my Hyd flat for 40 laks & pay 30 laks amount towards my Bangalore property House Loan as part payment towards Principle.
Can i claim Wealth tax exemption for the 30 laks part payment done to my 2nd Housing Loan.
Dear Manjunath ..Kindly note that wealth tax has been abolished.
Hi Srikanth
Thanks for your input. I misunderstood capital gain to wealth tax.
What about capital gains tax in this situation. Will I be able to get exemptions when I pay the part payment to my existing loan.
Dear Manjunath ..There is no provision to claim exemption on LTCG by using the proceeds/gains to close home loan.
Hi,
I am planning to buy two shops (commercial property) in next one month. I have to make a down payment of 30% of the total value of the property, for which I am planning to avail a loan. I need to pay 70% of the value at the time of possession which is after 3 years. To pay 70% of the amount, I am planning to sell one shop and make the payment for the other shop from the sale proceeds.
1. Can you please through some light, how can I save LTCG in this case.
2. Am I eligible to make the payment for one shop from the proceeds of another. If I do so, is there any way in which I can still save LTCG. or do I have to invest the entire proceeds in residential property to save LTCG.
Many Thanks in advance.
Dear Shilpi,
In how many years after acquisition, you are planning to sell one of your properties?
Are you planning to take loan for buying two properties, I am bit confused with your query.
If you taking loan then you need to close one of the loans to sell one property, am I right?
Also, the proceeds should not be invested in a commercial property, need to be invested in a Residential property only.
Thanks Sreekanth for your reply.
I will get possession in around 3 years or 3.5 years max.
I need to pay 30% of the total value now and rest 70% at the time of possession. So I am taking loan for both the properties but only for 30% of the total value. So suppose two shops are of 20 lacs each. Hence, I will take loan of 12 lacs only (30% of 40 lacs). I am planning to sell one shop at the time of possession. With the total amount received from the selling, I am thinking to pay off my loan (12 lacs) and also pay the rest 70% for one shop ( 70% of 20 lacs = 14 lacs). is it possible for me to do this?
Since I have to invest the proceeds in residential property, is there any way out by which I can pay atleast 14 lacs (70%) at the time of possession and save LTCG tax also.
Dear Shilpi,
It may all depends on what is the selling price that will fetch on your property that you are going to sell :)
Suggest you to consult a CA in this matter (for tax calculation purposes).
main 40 lakh main apna flate sale kar raha hun muje kitna tax chukana hoga
Dear sushil.. Kindly visit this link and you may use the available calculator..
Sreekanth,
Great job from your side. I have a query.
I read somewhere this and wanted to know your confirmation:
Tthe exemption of LTCG Tax when you sell an existing property and buy a new one is only valid when you have 1 residential property.
Details --> I have existing 2 house property. Sell one and and use this Capital Gain to give down payment of a new flat from this proceed.
So will I get LTCG exemption in this case?
Regards,
Manav
Dear Manav ..Could you plz share the link for this??
See this link:
https://goo.gl/z0kVh8
Dear Manav,
The link is regarding Section 54F.
W.r.t 54F, even I have mentioned in my article that one should not own more than one residential house prior to new investment.
However, in your case, its two house properties (and not Plot/Land), so Section 54 is applicable and not Sec 54F.
Thanks.. these sections are confusing for first timers :-)
Need experts like you to demystify it...
I purchase a land in 1988 for Rs. 35000/-
In 1989 i constructed a ground floor house for rs. 75000/-
In 2012 i started renovation of the building and constructed 5 house in 3 floors which completed in 2014.
i Took loan of 60Lacks for construction.
In Oct 2016 i sold Entire land and bulding for 1.6Cr
How to calculate Capital Gains?
Dear krishna ..Kindly consult a CA and get this calculated.
Hi Sreekanth,
Let me first thank you for making Relakhs.com quite an insightful website covering wide variety of financial aspects.
We are residing in a flat in Mumbai purchased in 2003 on my name with ongoing home loan.
In 2013, I and my wife jointly purchased another flat again on loan in my native Mangalore, which is still under construction. Completion date was end of 2015 but the project has been delayed and may take 2 to 3 years more for completion. ( honestly i dont know given the circumstances and trying to get out of this)
Also my Wife owns a small land in my native which was gifted by her father abt. 2 years back.
My plan is to sell the Mumbai Flat and to migrate to my native and build a house on the land which is in my spouse’s name.
Now my question is what are the different scenarios & implications with recent 2017 revisions on property transactions and second house purchase as in my case and how best I can save on LTCG on sale of Mumbai House property.
1. Can I combine the benefits of building a house in aforesaid land, as well as investing 50 lacs in Govt. Infra. Bond..?
2. Is there any implication on the flat we purchased which is still under construction..?
3. Can I add entire EMI component of the loan or only interest part while arriving at indexed cost of Mumbai flat..?
Any inputs on this regard are appreciated.
Regards.
Jai.
Dear Jaikishen,
There are two amendments in Budget 2017 wrt to LTCG on immovable property.
Holding period for LTCG is 2 years only from AY 2018-19 onwards and the Loss under the head 'Income from house property' will be limited to Rs 2 Lakh only.
Read: Important Direct Tax proposals in Budget 2017.
I believe that you can use the LTCG for Construction of house on plot but within 3 years from the date of sale of property. You may also invest the balance (if any) in Bonds.
Regarding Under-construction property , kindly go through this article..
You can consider only Interest portion of EMIs towards Cost of Acquisition.
As there are multiple transactions involved in your case, suggest you to consult a CA.
Thanx Sreekanth.. much appreciated.
Regrds.
Jai.
please read the Rs.25 lakhs instead Rs.20 lakhs of sale of plot
Dear pandu,
Yes, She 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.
As it is an Under-construction flat , the construction has to be completed within three years of the transfer of the first property.
My wife has sold (for Rs.20.00 lakhs)her plot 425 sqyrds in 2016 which was purchased in the year 2002(for 2 lakhs) for a profit of Rs.23.00 Lakhs and want to invest in buying a Flat under construction in 2017.(off course the flat cost is Rs.75.00 lakhs)
Please tell me this would attract any long term capital gains????