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Need clarity on ltcg on property

Mihir (Wealth Manager) (5293 Points)

02 February 2017

As per Budget 2017, the LTCG on immoveable property has been reduced to 2 years from 3 years.

When will this rule be applicable?

And what about the mandatory holding period of new property for 3 years ? Has holding period too has been reduced to 2 years ?

Thanks

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14 Replies

Nikhil Sharma (Government Service) (539 Points)
Replied 02 February 2017

This rule will be applicable from financial year 2017-18.

There are no amendments in those exemptions sections. So that mandatory holding period is still 3 years.

CA VIRAL SANGHVI (Finance head) (681 Points)
Replied 02 February 2017

Hi,

Agree with nikhil sharma

The budget is for FY 2017-18 so the amendment is applicable from FY 2017-18.

Mihir (Wealth Manager) (5293 Points)
Replied 02 February 2017

Thanks Nikhil and Viral.

Kalki Vital Narayanam (CA Final Student) (121 Points)
Replied 02 February 2017

This Rule will be applicable from FY 2017-18 i,e; AY 2018-19

Mukesh Kumar (Accounts Manager) (1466 Points)
Replied 09 February 2017

This is only proposal in budget 2017

Ishan Kakkar (Others) (58 Points)
Replied 11 February 2017

Originally posted by : Nikhil Sharma
	This rule will be applicable from financial year 2017-18. There are no amendments in those exemptions sections. So that mandatory holding period is still 3 years.

Hello!

Can you pls. tell as to which exemption sections are you talking about in view of this 3 years holding perriod??

Nikhil Sharma (Government Service) (539 Points)
Replied 11 February 2017

Section 54 , 54B, 54D, 54F, 54G

Ishan Kakkar (Others) (58 Points)
Replied 11 February 2017

Originally posted by : Nikhil Sharma
	Section 54 , 54B, 54D, 54F, 54G

So, you mean to say that we still need to hold the properties for 3 years to be eligible for LTCG?

Nikhil Sharma (Government Service) (539 Points)
Replied 11 February 2017

Holding period of 3 years is for the new property which you have to purchase to get your capital gains exempted from tax.

Ishan Kakkar (Others) (58 Points)
Replied 11 February 2017

Originally posted by : Nikhil Sharma
	Holding period of 3 years is for the new property which you have to purchase to get your capital gains exempted from tax.

But, then what about the announcement in the Budget about this holding period reduced to 2 years?

Nikhil Sharma (Government Service) (539 Points)
Replied 11 February 2017

These are two different things :

One holding period is of the property which you have sold i.e the one on which capital gains are being calculated . There is amendment in this holding period. Property being sold which was held for more than 2 years will be taxable as long term capital gains.

To get these capital gains exempt , you have to invest in different kinds of properties mentioned as per those exemption sections. If you transfer the new property you have purchased before 3 years then your exemption is withdrawn and your exempted capital gains become taxable.So there is mandatory 3 year holding period of new property . You are mixing up this holding period with the one mentioned in first para. There is no amendment in this 3 year holding period.

Hope its clear now.

1 Like

Ishan Kakkar (Others) (58 Points)
Replied 11 February 2017

Originally posted by : Nikhil Sharma
	These are two different things :One holding period is of the property which you have sold i.e the one on which capital gains are being calculated . There is amendment in this holding period. Property being sold which was held for more than 2 years will be taxable as long term capital gains.To get these capital gains exempt , you have to invest in different kinds of properties mentioned as per those exemption sections. If you transfer the new property you have purchased before 3 years then your exemption is withdrawn and your exempted capital gains become taxable.So there is mandatory 3 year holding period of new property . You are mixing up this holding period with the one mentioned in first para. There is no amendment in this 3 year holding period.Hope its clear now.

Thanks a lot! :)

Yes, it's clear now!!

Ishan Kakkar (Others) (58 Points)
Replied 11 February 2017

Originally posted by : Nikhil Sharma
	These are two different things :One holding period is of the property which you have sold i.e the one on which capital gains are being calculated . There is amendment in this holding period. Property being sold which was held for more than 2 years will be taxable as long term capital gains.To get these capital gains exempt , you have to invest in different kinds of properties mentioned as per those exemption sections. If you transfer the new property you have purchased before 3 years then your exemption is withdrawn and your exempted capital gains become taxable.So there is mandatory 3 year holding period of new property . You are mixing up this holding period with the one mentioned in first para. There is no amendment in this 3 year holding period.Hope its clear now.

Thanks a lot! :)

Yes, it's clear now!!

Ishan Kakkar (Others) (58 Points)
Replied 11 February 2017

Originally posted by : Nikhil Sharma
	These are two different things :One holding period is of the property which you have sold i.e the one on which capital gains are being calculated . There is amendment in this holding period. Property being sold which was held for more than 2 years will be taxable as long term capital gains.To get these capital gains exempt , you have to invest in different kinds of properties mentioned as per those exemption sections. If you transfer the new property you have purchased before 3 years then your exemption is withdrawn and your exempted capital gains become taxable.So there is mandatory 3 year holding period of new property . You are mixing up this holding period with the one mentioned in first para. There is no amendment in this 3 year holding period.Hope its clear now.

Thanks a lot! :)

Yes, it's clear now!!