Long term capital gain

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R R JHUNJHUNWALA

33 Points Joined July 2013

If Mr X have two flat in mumbai. Flat No-1 on rent and flat No-2 use for his residence. Flat No 1 sold in march 2014. Long term capital gain after indexation calculation used in buying new semi construct house in rajasthan. Mr.X want to sold flat no 2 also and want to some clarification. Please provide your valuable views. Flat no 2 purchased in nov 2007 in under construction from builder. Mr. X taken housing loan and pay through bank as and when builder demand as per there construction. Mr. X pay EMI and when indexation calculation done that time what amount indexation use . My means bank paid to builder date or principal amount paid portion in EMI on yearly basis. Can he use to flat no 2 LTCG in expansion of rajasthan house. If can then flat no 1 LTCG use in this house also eligible for tax exemption. Can we purchase two residential house feom LTCG received from flat no 2 Have any maximum limit to purchase residential house for avail of LTCG benifits.

Replies (2)

Mihir

Wealth Manager

5293 Points Joined December 2008

Cost of acquisition for flat no. 2 shall be the date of sale deed with the builder. The LTCG from sale of flat no.2 can be used in purchasing a new property or constructing a new property or purchasing infra bonds.

Swami Ayyappa Nuli

TAX ADVISOR & CONSULTANT AT G.S.T SUVIDH

1372 Points Joined June 2012

As Mihir sir said,Apply indexation on the amount prescribed in sale deed and in the year in which sale deed was executed and for furthur improvement expenses follow as below.Availing Loan from Bank does not qualify for Indexation benifit.Indexation will be available on amount that you actually appropriated from your loan to your builder and in the year in which you actually spent.So list out payments made in different years to your builder and apply indexation on yearly basis.Repayment of Loan through EMI's will be relevant in availing Housing loan repayment u/s.80C.You can invest both sale proceeds from Flat1 and Flat2 in Constructing property and avail capital gain exemption.You can not invest sale proceeds of Flat2 in more than one property and as you invest in only one property your contention is valid.Further comments needed,Thank you!