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Sale & Purchase of a house

Akshay Bhatt (Sr. Exec. Asst. - Finance & Accounts) (34 Points)

22 July 2020

Dear all,

Greetings!!!

I have a query about my property. I have purchased my first house in June 2015 and sold it in August 2019 and after that I have bought a new house in October 2019.

Now my query is what will be the treatment of above transactions in my ITR? I have invested all money which I got from my first house into my second house. Weather I have to pay tax or will it come under 0% tax? Will my income which received from my first house be taxable?

Please guide me.

Thanking you.

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5 Replies

Maryam Hasan Meem (Student) (448 Points)
Replied 22 July 2020

As per section 54 of income tax act, 1961;
Capital gain on tranfer of residential house shall be exempt if
* one residential house is purchased within 1 year before or 2 years after date of transfer

* constructed within a period of 3 years after date of transfer.

Quantum of exemption:

1. cost of new residential house equal or more than capital gains, entire capital gains is exempt.

2. cost of New Residential house less than Capital Gains, to the extent of cost of new residential house is exempt.

1 Like

Ravi SADhiyan (Practice) (4510 Points)
Replied 22 July 2020

Originally posted by : Akshay Bhatt
	Dear all,Greetings!!!I have a query about my property. I have purchased my first house in June 2015 and sold it in August 2019 and after that I have bought a new house in October 2019.Now my query is what will be the treatment of above transactions in my ITR? I have invested all money which I got from my first house into my second house. Weather I have to pay tax or will it come under 0% tax? Will my income which received from my first house be taxable?Please guide me.Thanking you.

No Tax Liability

If You Invest all Sale Consideration on the Purchase & Construction of New Residential House Property according to section 54 of Income Tax Act.

Maryam Hasan Meem (Student) (448 Points)
Replied 22 July 2020

As I mentioned the section 54 above, CAPITAL GAINS on transfer of Residential House Means the sale consideration Made on August 2019 from the house purchased in June 2015

and within prescribed time, all the sale consideration used by purchasing or investing the residential house(New house) on October 2019

since ,you have invested Full Amount Of sale consideration in purchasing New house(only New residential house is allowed to invest)

All the sale consideration (capital gains on tranfer of old house) is EXEMPTED under section 54.

1 Like

Akshay Bhatt (Sr. Exec. Asst. - Finance & Accounts) (34 Points)
Replied 22 July 2020

Thanks for reply.

I have invested whole amount in purchase of a resale property. Is this eligible u/s. 54?

Maryam Hasan Meem (Student) (448 Points)
Replied 22 July 2020

As per under section 54, the property must be long-term capital asset.

if the resale property is a residential house and tranfer before 3 years from the date of its acquisition,

then cost of new house purchased for resale purpose Will Be Reduced by Capital gains Exempted Earlier under section 54.

And when you resale your property before prescribed time , any capital gains arise would be charged as Short-term capital gains.

IF such investment(sale consideration from sale of resale property) is not made before the date of filing of return,

then the short-term capital gains has to be deposited under the CGAS(Capital Gain Account Scheme).

1 Like