Capital gains on property

In respect of long term capital gains on sale of a residential house, you can claim exemption from tax if you invest the taxable long term capital gains to purchase a ready to move in house within two years after the date of sale of the house. For ready to move in house, the exemption is still available if the house was purchased before the date of sale of the house but not beyond one year from sale date.

This exemption is available only in respect of investment in one residential house in India but the income tax laws give you once in a lifetime opportunity to invest the long term capital gains on a house, in two houses to claim exemption on long term capital gains arising on one house. The one time option can  be availed if the amount of long term capital gains on sale of the house does not exceed Rs 2 crore.

You can also claim exemption from payment of such long term capital gains if you construct a house within three years. Booking an under construction house is also treated as construction of a house. In case you are planning to buy a property through booking of an under construction property, please ensure that you get the possession of the property within a period of three years as specified above.