Hi,
I sold my house in 10 February ' 2020 and my plan to purchase new house got delayed due to covid. My new house registry will be done in first week of January'2021.
Query I request to clarify is that I have assumed that the money from sale need to be put in Capital gains account in public sector bank before December 31st (the new date for filing income tax return) even though I will need to take out the money in few weeks to purchase new house. Is my assumption correct?
Regards,
TG
I bet you can avoid capital gains tax.
One kind of capital gains that you can avoid is on the sale of your principal residence. If you have lived in the home as your principal residence 2 out of the last 5 years, you get to exclude $ 250K (single), $500K (married) of gain ! Wow. That’s avoiding paying capital gains tax BIG time. You don’t need to reinvest the proceeds or anything like that.
Another way to avoid capital gains tax is to do a Sec 1031 exchange. So, for example, if you had a car, its been used for business and depreciated, so your cost basis is now close to zero. You trade the car in for a new one and you don’t have to pay tax on the trade in value, due to the Sec 1031 provisions.
A third way to avoid capital gains is to offset it with capital losses. You may have sold something for a loss in a prior year, and you can carry the loss over ( except for the $ 3000 which you get to apply against ordinary income each year). So you may have this huge capital loss and you can apply it against any capital gain.
Hi BONNIESHONA
Thank you for your response, but I am in India and asked the query for process as per Indian tax laws and not USA tax laws.
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