Friends,
I have some basic queries on tax laws on sale/purchase of residential property, and would really appreciate if you could throw some light on this:
- I believe that the long-term capital gains from sale of old residential property must be invested in a new residential property, to save tax on the gains. Is it only the long term capital gain that has to be re-invested, or the original base amount of the old residential property as well? (e.g., If I bought my old house for 50 and selling it for 100, then do I have to (a) re-invest the whole 100 in a new house (this is popular opinion) or (b) just the capital gain of 50?
- Would the registry charges (typically 5-7% of the new house price) be considered a part of this "Re-investment" to save taxes, or not?
- Let's say I own 75% in our old house and my wife owns the rest 25%. Can I transfer another 25% of the share to her (without taking any money of course) without paying the registry charges to the govt?
- If I am selling my old house for 100, and buying 2 new adjacent flats for 75 each (so total 150), can I consider the 2 new adjacent flats to be a combined "one self-occupied house" for the purpose of saving tax on the sale proceeds of the old house? (at least for rental income purposes, the govt of India allows this)
Thanks a lot in advance!
Regards,
Gaurav
CAclubindia
