Long term capital gain

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prakash (Querist)
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10 October 2013 Sir,
My friend has sold his residential open plot,which he owned for 5 years.He wants to purchase a residential house from that amount.Can he save the long term capital gain by purchasing the house.
please advice.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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10 October 2013 Yes. You can buy a house within a year or construct a house within 3 years to claim exemption from capital gains. Refer to Section 54F of the income tax act 1961

CA Pallav Singhania

CA Pallav Singhania (Expert)
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10 October 2013 He can purchase another house and can claim Exemption U/S 54F of the IT Act,

However, Any long term capital gain arising on such transfer must be utilized within 2 years from the sale for the purchase of another HP, Or within 3 years in case of construction..

The above exemption shall be available only when the assessee does not own more than 1 Residential Property Exclusive of the one he has bought for claiming exemption U/S 54F..

regards,

Ganeshbabu K

Ganeshbabu K (Expert)
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10 October 2013 1)Section 54 speaks about exemption incase of transfer of capital gain arising on transfer of residential house and hence it is not applicable for our author
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2)Exemption can be available U/s 54F
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Provided
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1)assesse should purchase a residential house with in one year before or 2 years after the date on which transfer tookplace or constructed a residential house with in a period of 3 years after the date on which transfer took place
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2)Please note Assesse does not own more than one residential house on the date of transfer of the original asset,exclusive of the one purchased for claiming exemption under this section i.e,Sec.54F
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3)The assesse should not purchase , with in a period of 2 years after the date of transfer of original asset or construct with in a period of 3 years after the date of transfer of original asset,any other residential house other than new asset

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