Can we avoid capital gains tax by reinvesting the money obtained through sale of
properety( Property inherited in 1964 and lying within Muncipal limits) for purchase of another property .
I was informed that if the property lies in Muncipal limits we have to pay the capital gains tax .
I also got the advice that if the seller does not have a house of his own, then he can invest the money for buying a house or land and need not pay the capital gains tax in such case. Is this correct?
Hello Gopal
You have 4 options to save your capital gain tax
1-- If the property sold by you is a Residential house property then you can invest the same for purchase of another residential house property. Sec 54
2-- If the property sold by you is a long term capital assets other than residential house peoperty than you can invest the same in purchase Specified Bonds ( NHAI) Sec 54EC
3-- If the property sold by you is a long term capital assets other than residential house peoperty than you can invest the same for purchase of residential house property ( if u dont have more than 1 residential house property at that time) deduction is allowed proportionetly
4-- If the property sold by you is a agriculture land (urban) than you can invest the same for purchase new agriculture land
I think the property you are talking about is a land as you stressing on muncipal limits...
CAclubindia
