Long term capital gain exemption
This query is : Resolved
16 February 2013
One of my friend having proprietorship business. The building where this business is exist was purchased in 1999.
He also have a house which is purchased in 2007.
Now, He is planning to sale both the properties
and if he purchase new residential house
Can he set off long term profit of both the properties ?????
He also have a house which is purchased in 2007.
Now, He is planning to sale both the properties
and if he purchase new residential house
Can he set off long term profit of both the properties ?????
17 February 2013
Dear Dhaval,
The answer to your question is, Yes. The assessee can avoid paying LTCG on both the sale transaction by investing the proceeds in a residential house.
However, the exemption shall be available under different sections:
For the residential house, the exemption shall be available under Section 54(1) and for the exemption for property used for business shall be available under 54F.
The point of difference between computation of exemption between these two section is as under:
In section 54(1), only the capital gains need to be reinvested in the residential house. However, in 54F, the exemption shall be provided on the basis of total sale proceeds.
The answer to your question is, Yes. The assessee can avoid paying LTCG on both the sale transaction by investing the proceeds in a residential house.
However, the exemption shall be available under different sections:
For the residential house, the exemption shall be available under Section 54(1) and for the exemption for property used for business shall be available under 54F.
The point of difference between computation of exemption between these two section is as under:
In section 54(1), only the capital gains need to be reinvested in the residential house. However, in 54F, the exemption shall be provided on the basis of total sale proceeds.
19 February 2013
in case of office building sales , is there any other option of investment except residential for exemption ?
19 February 2013
you can use section 54EC (exemption upto Rs 50 Lakh investment in bonds as prescribed under the said section)
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