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CA Mayur R M (Chartered Accountant)     17 February 2012

Ltcg on house property

Hey friends... I have a doubt........A person has sold a house property and earned a LTCG. Now Section 54 and sub-sections say that we need to invest in another house property to claim exemptions. So, the question is that whether a person can invest in two house properties at the same time and claim exemption u/s 54. For Eg:- If I earned Rs. 50 Lakhs LTCG and the sale consideration was Rs. 70 Lakhs, then can I invest in two house properties to the tune of the Rs. 35 lakhs each and claim the exemption of Rs.. 50 Lakhs from LTCG?????



 14 Replies

Jitesh Golani

Jitesh Golani (student)     17 February 2012

In Brief i can say that if the two houses purchased by the assessee are used as one residential unit. Say there are two flats but both are interconnected then it can be considered as one unit.For more clarity read the following para:


"As regards claim for exemption against acquisition of two houses under Section 54 of the Act, the same is not admissible in plain language of statute. In the judgment of Karnataka High Court in CIT v. D. Ananda Basappa [2009] 309 ITR 329 (Kar), referred to in the impugned order, exemption against purchase of two flats was allowed having regard to the finding that both the flats could be treated to be one house as both had been combined to make one residential unit. The said judgment, thus, proceeds on a different fact situation."
For further details:
https://www.itatonline.org/forum/index.php?topic=428.15

Hope this solves your query.

CA Mayur R M

CA Mayur R M (Chartered Accountant)     17 February 2012

Thanks a lot dude.......Keep it Up!!!!

scg

scg (ed)     17 February 2012

Hi All

I also had a similar query as that of Mayur..If two houses can not be baught to claim tax exemption on sale of one house,I am interested in knowing, rather urgently,if in such case I buy a flat worth 35 lac and invest balance 15 lac in specified infrastructure bond within specified time so as to save tax on  entire 50 lac capital gain?

Thanks,

scg

Mihir

Mihir (Wealth Manager)     18 February 2012

If you are buying 2 flats of 1BHK and converting into 1 flat of 2-3BHK, then exemption will be allowed.

scg

scg (ed)     18 February 2012

thanks Mihir.Ipresume it applies to higher category of houses ie I can buy 2flats of 2bhk with aview to convert in 1flat of 3/4 bhk and so on.what are additional documents reqd to be furnished in this connection while filing IT return?Will someone reply to my second part of Q ie buying a flat from part of CG amount and depositing the balance in infrastructure bond.?Thanks.

 

Suguna

Suguna (VP)     18 February 2012

yes you can caim deduction under sec 54EC, since deduction  is available on the  transfer of any long term capital asset. provided amt is  invested within 6 months from the date of transfer and  does not exceed RS 50lakhs in a financial year.

Nagam saisameer

Nagam saisameer (CA FINAL )     19 February 2012

Good Explanation given in Karnataka High Court in CIT v. D. Ananda Basappa [2009_

CA Milan Goel

CA Milan Goel (Job)     13 March 2012

Originally posted by : CA Mayur R M

Hey friends... I have a doubt........A person has sold a house property and earned a LTCG. Now Section 54 and sub-sections say that we need to invest in another house property to claim exemptions. So, the question is that whether a person can invest in two house properties at the same time and claim exemption u/s 54. For Eg:- If I earned Rs. 50 Lakhs LTCG and the sale consideration was Rs. 70 Lakhs, then can I invest in two house properties to the tune of the Rs. 35 lakhs each and claim the exemption of Rs.. 50 Lakhs from LTCG?????

Sir, First of all It is to be noted that Exemption u/s 54 is available on the mount of LTCG, not Net consideration. i.e. If you invest Rs. 50 lacs in new house property, you get full exemption of LTCG of Rs. 50. You need not invest Rs. 70 lacs for claiming Rs. 50 lacs exemption.

Second, You can invest only in One house Property. Not 2 or more. ( as decided by Bombay High court in case K. C. Kanshik v. P. B .Rane ITO). So if u pruchase 2 houses of 35 lacs each, u will get exemption for only one. i.e. Rs. 35 lacs

the Case of Cit v. D. Ananda basappa applies only if 2 adjacent houses are purchased and modified in such a way that assessee use them as 1 Unit.

Mohamed Safwan

Mohamed Safwan (Articled Assistant)     04 February 2016

Sir,

I have a doubt. If a person has not invested the capital gains in the year of LTCG how it must be disclosed in return?? Since income tax provides 2 years time period to invest the same. Unless we enter amount invested the computation shows tax payable.

vijayakumar

vijayakumar (proprietor)     10 February 2016

Sorry sir, The last budjet our fin min has changed the rule. the plural is CHANGED to singular. In other words for one PAN number - for any capital gains you can buy only ONE PLACE -9 wether plot/ apartment/ or any thing) for the rest you have to pay . Kindly check the latest 9 last budjt amendments)

 

 

vijayakumar

Rajesh

Rajesh (DO)     14 July 2016

Dear Sir, My mother sold our parental house which was in her name and now she has purchased a new house for me in my name from the entire funds received from sale of the parental house.

is she exempted from LTCG tax as the capital gain has been invested in purchase/construction of property in the name of family member (son) where she will also be residing with me in new house.

Please reply

Vijay Kumar

Vijay Kumar (Retired Central Govt service)     07 June 2021

A want advice on the  case :  Save LTCG on sale of property by  purchasing a residential property 1 year earlier.

I have  Purchased a residential property jointly with spouse for 1.48 Cr in Nov 2019.

during  purchase I can able to sell my  20 year old Flat .  i have paid from my retirement benefit and Fixed deposits.

Ten months later  I sold old flat  for 48 Lakhs (  less than stamp duty 60 Lakhs) because of no buyer for 20 year old flat.

Indexed cost of Acqution  of  old flat is 33 Lakh and thus LTCG  considerign 50C  is  60-33 =27 lakhs. 

Since I have purchase  another property   before one year, i want to claim LTCG exemptions.

Please comment and suggest  .

Vijay Kumar

Vijay Kumar (Retired Central Govt service)     07 June 2021

A want advice on the  case :  Save LTCG on sale of property by  purchasing a residential property 1 year earlier.

I have  Purchased a residential property jointly with spouse for 1.48 Cr in Nov 2019.

during  purchase I can able to sell my  20 year old Flat .  i have paid from my retirement benefit and Fixed deposits.

Ten months later  I sold old flat  for 48 Lakhs (  less than stamp duty 60 Lakhs) because of no buyer for 20 year old flat.

Indexed cost of Acqution  of  old flat is 33 Lakh and thus LTCG  considerign 50C  is  60-33 =27 lakhs. 

Since I have purchase  another property   before one year, i want to claim LTCG exemptions.

Please comment and suggest  .

vijayakumar

vijayakumar (proprietor)     07 June 2021

Sir, 

Your query is not clear. What ever I could understand == 

SOLD A old flat for xx  lac. Indexed value is ---  aa lac. USED THIS AMOUNT +  saving & other funds - bought flat for 148 lac.

Now u sold this 148 lac flat or ???.

Since you had sold old flat & used these funds for 148 lac flat there could not be any issue.

What is your query 


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