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Proceeds from Commercial property into Residential propert

Prem Dhawan (service) (75 Points)

28 July 2010

Hi,

Please advise if I can invest (all or partial) the money received after selling a commercial property into a residential property.

Well, in other workds, I want to know if its allowed to invest (all or partial) the money received after selling a commercial property into a residential property. May be its not allowed, meaning that money from commercial property can be invested only in commercial property.

There is no long term capital gain if money is reinvested in the property.

Thanks.

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6 Replies

CA Amit Kumar Khaitan (Research Analyst) (360 Points)
Replied 28 July 2010

Your question is not clear to me.

What are your specific concerns regarding the investment?

Please put a specific question.

Prem Dhawan (service) (75 Points)
Replied 29 July 2010

I have modified my previous post/question.

Rishab (A.C.A.) (155 Points)
Replied 29 July 2010

I assume that the commercial property owned by you was rented & Income from the same was taxable under HP (so you have not claimed any depreciation on the property)

Have you earned Capital Gains on sale of the Commercial property?

Yes, you can take benefit of sec 54F if you purchase Residential house property within 2 yrs or construct within 3 yrs from the date of sale or before 1 yr from the date of sale.

But, you have to deposit the Net Proceed amount in Capital Gain A/c Scheme before due date of filling of Return.

For claiming exemption U/s 54F you have to invest Net Sale Consideration in Residential house property. if u invest less than Net Sale consideration u will get only proportionate deduction of capital gain.

For claiming exemption U/s 54F you have to invest Net Sale Consideration in Residential house property. If u invest less than Net Sale consideration u will get only proportionate deduction of capital gain.

To claim exemption u/s 54F you should not own more than one house at the time of transfer

You will get no benefit if you invest proceeds of Commercial property for buying new Commercial property.