Adjustment of profit from stock investments to buying an apartment

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This discussion clarifies how profits from stock investments can be used to offset the cost of buying an apartment and furniture. While long-term capital gains (LTCG) can be exempt from tax if reinvested in property under Section 54F of the IT Act, short-term capital gains (STCG) are generally taxable. The user inquired about adjusting an 89 lakh profit against an 81 lakh property purchase, and it was confirmed that only the LTCG portion is eligible for tax exemption.

gk (Querist)
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07 July 2023 Dear Experts
Good Morning.

In the FY 22-23, I had approximately 89 lakhs profit including intraday/short-long term gains.

In this same year I bought a flat for approximately 77 lakhs (inclusive of all regn and service charges etc.) and in addition I spent around 4 lakhs for furniture etc. - a total 81 lakhs spent.

Whether I could adjust the above 89 lakh profit gains to the flat purchase/furniture amount of 81 lakhs - to avail the tax adjustments.

Tour response will be highly appreciated and surely helpful to me.
Thanks with regards

GK

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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07 July 2023 If you have long term capital gain from any source of investment, you can get exemption for the flat purchase, (subject to other conditions as per sec. 54F IT act); but for short term capital gain there is no option.

gk (Querist)
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09 July 2023 Thank you very much Dhiraj Sir

Out of the total 89 lakhs, 75 lakhs is long term only ....

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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09 July 2023 So, you can save only tax over long term capital gains i.e. 75 lakhs by investment of relevant sale proceeds in house property u/s. 54F of IT act.

gk (Querist)
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10 July 2023 That means I need to pay the tax "for the balance amount 14 lakhs of short term gain" only .....

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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10 July 2023 Yes, for STCG there is no exemption. Also check if total of LTCG is eligible for exemption u/s. 54F, as it depends upon total investment of sales proceeds.

gk (Querist)
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10 July 2023 Thank you very much Dhiraj Sir for your lightning responses with all relevant information to be taken care.
Highly appreciated for your valuable suggestions and advice.
I will surely check with the same as you recommended.
with great respect and love.
⚘
GK (Gopal)🙏

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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10 July 2023 You are welcome.

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