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Capital gain tax on 3 rd house property

Garvit Dave (Portfolio Analyst & Tax Consultant) (295 Points)

18 December 2012

Hi Friends,

I have 3 houses in bangalore and out of these I have sold one house and my capital gain is approx 50 lakhs and capital gain tax after indexation is around 10 lakhs. I have info on 54 EC bonds but i want to invest in new house property.

can I still save my capital gain if I utilize it in buying my another house?

Please advice

Thanks

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13 Replies

CA Manish (Job) (5264 Points)
Replied 18 December 2012

yes, you can purchase new house property to save tax.

1 Like

HARPREET SINGH (Chartered Accountant) (79 Points)
Replied 18 December 2012

Yes u/s 54, you can claim exemption and can bought a new residential house but you cant sell that house for next 3 years.

1 Like

Garvit Dave (Portfolio Analyst & Tax Consultant) (295 Points)
Replied 18 December 2012

Originally posted by : CA Manish Malu

yes, you can purchase new house property to save tax.

Thanks a lot Mr.Manish & Harpreet.

Do I need to put my capital gain amount in Capital gain saving scheme 1988 or i can directly use it for construction of new house? And if I can use it directly to build a house in 3 yrs than what is the use of CGSS 1988 account?...

Please update me on the same

Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 18 December 2012

Your construction might take some time (say 6 to 7 months).....and exemption is available only if the house has been constructed till due date of filling of return of income or if the same is not possible then keep your funds likely to be used in construction in a special account tobe opened under Capital Gains A/c scheme,1988........(the exemption will be available equal to the amt. deposited in CGAS,1988)......so it is advisable to deposit the investible amount in A/c under CGAS,1998 and then withdrew from the bank as and when required by submitting FORM-C to bank.

1 Like

HARPREET SINGH (Chartered Accountant) (79 Points)
Replied 18 December 2012

Hi Maish...Exemption is - you can use that money for construction in next 3 years and you can acquire new house 1 year before sale & upto 2 years from date of sale. If you have any excess money in hand out of sale receipts (CG portion), you have to deposit that money into Bank Account & have to route all transactions through that Account but if you have already spend whole CG portion in another residental house, no need to deposit.

HARPREET SINGH (Chartered Accountant) (79 Points)
Replied 18 December 2012

Sorry wrongly spelled Manish.

Above message is for Garvit too.

Garvit Dave (Portfolio Analyst & Tax Consultant) (295 Points)
Replied 18 December 2012

Dear Saurabh/Harpreet/ Manish,

As per sec 54F I should not own on the date of transfer of the original asset more than one residential house (other than the new house) where as i own 1 self occupied property and 1 let out property at present. Still I can purchase a new residential house and claim exemption on my capital gain tax......Please advise!!!!

Thanks & regards

Garvit

CA Manish (Job) (5264 Points)
Replied 18 December 2012

Originally posted by : Garvit
	Dear Saurabh, As per sec 54F I should not own on the date of transfer of the original asset more than one residential house (other than the new house) where as i own 1 self occupied property and 1 let out property at present. Still I can purchase a new residential house and claim exemption on my capital gain tax......Please advise!!!! Thanks & regards Garvit

You are not supposed to claim exemption u/s 54f you have to claim exemption u/s 54.

1 Like

Garvit Dave (Portfolio Analyst & Tax Consultant) (295 Points)
Replied 18 December 2012

Manish,

My main doubt is -i own 1 self occupied property and 1 let out property at present. Still I can purchase a new residential house and claim exemption on my capital gain tax......Please advise!!!!

CA Manish (Job) (5264 Points)
Replied 18 December 2012

Originally posted by : Garvit
	Manish, My main doubt is -i own 1 self occupied property and 1 let out property at present. Still I can purchase a new residential house and claim exemption on my capital gain tax......Please advise!!!!

Yes you can do so.

Back in the Game (a) (1273 Points)
Replied 18 December 2012

@ Garvit Have you held the asset(house property) sold for period of atleast 3 years....??

If u Satisfy above condition u can claim Exemption under Sec 54..Else No...

SUDAGAR.C (Prop) (119 Points)
Replied 19 December 2012

Yes mr.manesh Even if u have more than house property and capital gain on sale of above will get exempted if you bought a house property one year prior to that transfer or buy a house property with in two year or construct a house property with in 3 years as per sec 54