I have sold a commercial property recently in Mumbai in May 2012 and Capital Gains is 1 crore 35 lakhs.To save capital gains tax I need to buy another residential property till 31st July 2013.
I can not find any big property worth Rs.1 crore 35 lakhs of my choice as all of them seem overpriced in today’s crazy market.So I want to buy 4 small residential flats in Virar,Panvel etc where properties are cheap and prices can only appreciate in future.These flats will be purely for investment.
My background: I have a small business and a residential property in Mumbai in my single name as of now.I do not have any relative in whose name I can buy various flats.All properties which I will be purchasing will also be in my single name.
So the question is,in order to save capital gains tax, instead of 1 residential flat of 1 crore 35 lakhs, is it ok if I buy 4 smalls residential flats of combined value of Rs.1 crore 35 lakhs.Will then the total amount of Rs.1 crore 35 lakhs be exempt from Capital gains tax?
I know that I can buy bonds of NHAI of 50 lakhs or open a capital gains account with bank.But I prefer to buy property and invest money asap if I get a deal of my choice at sensible price.
I also understand that if I buy 4 small flats then under the heading of “Income from other sources” I will have to pay rental income of other flats even if I do not actually rent them out.Is there any way to avoid this rental income like taking loans for the extra 4 flats which I am buying,etc?
Thanks in advance.
With Regards,
Pooja
CAclubindia
