Implications of Capital Gains for House Property

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1 Points Posted on 19 March 2023
Dear Team,
Greetings of the day.

Had some query/ needed some clarificatin regarding Short term Capital Gains/Large Term Capital Gains.

We sold a house purchased 10-15 years ago & within a year invested the sale proceeds for buying a new residential house.
So, now If I sell the new home purchased within next 2 years, will the transaction attract STCG or LTCG?


For example:-

If I bought a residential house property for *10 lakhs* in January 2010 & sold it for INR *12 lakhs* in June 2021 for buying a new residential house property for INR *15 lakhs* & the newly purchased RHP If we sell in July 2023 (i.e., after 2 years) for INR *16lakhs* for the purpose of buying a new house , so will this sale of my newly bought house attract any STCG/LTCG? If I re-invest the sale proceeds for buying a new house.
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On 19 March 2023 at 00:45 Report
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Quick Summary
This discussion clarifies the implications of capital gains tax when selling a house property. It addresses whether selling a newly purchased home within two years of acquiring it, after reinvesting proceeds from a previous sale, will result in Short Term Capital Gains (STCG) or Long Term Capital Gains (LTCG). The response explains that if an exemption under Section 54 of the IT Act was claimed on the first property, the new property cannot be sold within three years. Selling before this period will lead to the previously exempted capital gains being taxed, with the cost of the asset reduced accordingly.

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Profession Business
28246 Points Posted on 19 March 2023
Transfer of capital asset leads to capital gain.
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On 19 March 2023 at 08:58
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SEO Sai Gr. Hosp.
212450 Points Posted on 19 March 2023

First of all. if you had claimed exemption u/s. 54 of IT act for AY 2022-23, you cannot sell the newly purchased HP before 3 years of its purchase. Otherwise, you will be taxed for the LTCG claimed earlier.

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On 19 March 2023 at 10:52
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Chartered Accountant
1005 Points Posted on 20 March 2023

If the new house is transferred before 3 years from the date of its purchase, then, the cost of the asset will be reduced by the capital gains exempted earlier for computing the capital gains.

LTCG or STCG will depend on the period of holding of the new house. 

In case of any further queries, kindly mail me at casoravgupta @ gmail.com

Thanks & Regards
CA. Sorav Gupta
(Practicing Chartered Accountant)

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On 20 March 2023 at 12:23

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