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Capital gains on sale of residential property
I have a few queries regarding capital gains arising from sale of residential property:
1. Can the assesse purchase a commercial property from the sale proceeds arising out of sale of a residential property? If yes then how much benefit can be claimed?
2. How will the capital gains be assessed in case of joint ownership of the property?
3. In case of joint ownership, how can the investments be made (in property or bonds) and how much?
4 For claiming the cost of improvements, are the supporting bills required? (since the repairs and improvements were carried out over the tenure of ownership, how is it possible to produce the bills)?
5. In case where the purchase agreement mentions that 2 adjacent houses were purchased and practically the houses are joined and is now a single flat? Can it be treated as a single residential property for sale?
Replies (2)
Hello..
Answer 1) You have to buy only residential property to save tax on capital gains arising out of sale of any other property. Means you cannot buy land or commercial property to save capital gains tax..
Answer 2) The amount of sale consideration would be distributed in proportion to investment made by each one of you & capital gain tax worked out accordingly.
Answer 3) If you purchase a residential property in joint names in the same proportion, within two years of the date of sale and the amount of capital gain is utilised for the purchase of a new residential house, then the amount of capital gain would not be chargeable to tax.
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