Capital Gains on Sale of house

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2011 Hi,

My father bought a flat in 1986 and he expired in 2005. By virtue of the legal heir, I got the house transfered to my name in Mar 2011. Since I don't live anymore in the city where the flat exists, I am planning to sell that house.

What are the tax implications if I sell the house and methods to avoid tax?

Thanks

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

29 May 2011 You will not get much benefit of indexation as the asset is being sold within a year of holding and the Cost inflation Index of FY 2010-11 and FY 2011-12 will be almost similar.

Of course, the gain will be Long Term, as previous owner's holding period is also taken in account.

You can get exemption from capital gains tax, if you invest the gains in a new residential house.

Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2011 Thanks for the response,

Just a query, within how much time can I invest the gains in the new residential house to get exemption from capital gains tax?

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)

29 May 2011 THE INDEXATION BENEFIT WILL BE ALLOWED FROM THE YEAR UR FATHER ACQUIRED THE ASSET THERE ARE A NO OF JUDGMENTS ON THIS ISSUE
U CAN INVEST THE GAINS IN A NEW HOUSE OR PURCHASE BONDFS NOTIFOIED UNDER SECTION 54EC TO SAVE TAX

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

30 May 2011 Query- within how much time can I invest the gains in the new residential house to get exemption from capital gains tax?

For construction of new House :3 years
For Purchase of House: before 1 year or after 2years from the date of transfer of old house.
Mean time the Capital Gain amount has to be deposited in Capital Gains Account before the due date of filing of Return.

Suppose you sell your house today, you can
invest the gain in new residential house or deposit in capital gains a/c before 31.07.2012.

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