Save Rs 499. Go Ad-Free with CAclubindia Pro for 2 Full Years. Subscribe Now!

Long Term Capital Gains

Tax planning 251 views 2 replies

Mahesh Balakrishna

8 Points Posted on 21 December 2020

Hi,

Need help on the long term capital gains (LTCG).

I am planning to sell my residential open plot ( Vacant Site ) and need to know if I can use one portion of the sale consideration to purchase another open plot and invest the remaining amount in Tax saving Infrastructure Bonds.

I have consulted couple of CAs and few mentioned that to get tax exemption we need to invest in a residential house and not in residential site.

If I can invest in another residential plot, please confirm if the investment be made in Infrastructure bonds + Residential Plot + deposit in capital gains account ( remaining amount ) and construct a house in the open plot before 3 years ?

Example : Please let me know if below plan can be followed to get exemption from long term capital gains.

If Sale Consideration is 1 Cr.

Tax Saving Bond - 50 Lakhs

Investment in residential plot : 40 Lakhs

Remaining 10 Lakhs in capital gains account.

Regards,

Mahesh

Replies (2)

Sivaramaraju G

Learner

2398 Points Posted on 22 December 2020

There should be a land to construct house and as per income tax act house property means any building (or land adjacent to such building). hence you can invest amount in land to get exemption and make sure just get the plan from local authorities for house construction and start some basic construction work. and you can keep the balance in capital gain account and utilize the same for construction.