Capital gain

Tax planning 845 views 6 replies

Anubhav

Advocate

25 Points Joined July 2013

Hi,

I have a query relating to the issue of CAPITAL GAIN arising out of selling of Ancestral Property. The Query is as follows:

I have sold my Ancestral Property for Rs. 60 Lac which has been paid to me by Cheque. I am plainning to purchase new property from this amount so as to avoid paying capital gain tax.

For this purpose, I need to know is it compulsory for me to invest the full amount of Rs. 60 Lac in purchasing a single property or I can purchase two Properties of Rs. 30 Lac each?

Thanks and Regards,

Anubhav

Replies (6)

Guest

Assuming that your inherited property was not a residential house, if you want to buy a new residential house U/s 54F the net SALES CONSIDERATION should be invested in Residential house within specified time.

Also he should not own more than one residential house other than the new asset. So in my opinion you cannot buy 2 houses.

Best thing is to invest the CAPITAL GAINS in Bonds u/s 54EC.

Anubhav

Advocate

25 Points Joined July 2013

Hi Madhavi,

The Ancestral Property was a residential property. In this situation can 2 houses be purchased?

Mihir

Wealth Manager

5293 Points Joined December 2008

You can consider buying one flat. And with regards to the rest of the balance, you can invest in infra bonds and open FDs. This will provide you some liquidity. Infra bonds has a lock-in period of 3 years.

In case the food bill is implemented, the money allocated shall be recovered via taxes. And it is unlikely that the manufacturing sector will show some positive trend. In such a condition, keeping some liquidity will help you in difficulty. Not a pleasant economic scenario in the short and medium term.

Guest

If the property was residential , you can choose to invest the CAPITAL GAINS (net consideration less indexed cost of acquision of owner) in a house u/s 54.

A recent judgment of Delhi high court in the case of CIT v. Gita Duggal (ITA 1237/2011, dated 21 February 2013, Assessment tear 2007-08) clarified the applicability of levy of capital gains on such transaction and concludes that taxpayer should be given deduction under section 54 (and even section 54F) of the Act, in respect of different residential units in same building.

As about 2 houses, I am not sure!

sudheer

audit assistant

44 Points Joined July 2013

hi, u can purchase more than one house property, same time miss madhavi is also correct one

dattatraya

becoming a CA

66 Points Joined December 2009

here you can not get the benefit of 54F as sec 54F is applicable when you sold any asset other then residential house property & you invest in residential house property. In your case you sold residential house property so you can get the benefit of sec 54 or sec 54EC.

In your case you can buy 2 seperate house to get benefit of sec 54 or you can invest in bonds of NHAI / RECL to get the benefit of sec 54EC