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Tax benefit on Sale of property

Tax queries 144 views 1 replies

saurabh kaushik

1 Points Joined January 2025

Dear Sir

I had purchased one flat in patna on March 2023 and purchased another on oct -23 in patna .

I had sold my Patna flat on Jan 2025. Can I adjust my short term gain on sale of Patna flat against purchase of flat of Mumbai .

Replies (1)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9447 Points Joined December 2011

To adjust the short-term capital gain from the sale of the Patna flat against the purchase of the Mumbai flat, you'll need to consider the following:

Short-Term Capital Gain (STCG) Since you sold the Patna flat within 24 months of purchase (March 2023 to January 2025), the gain will be considered a Short-Term Capital

Gain (STCG). Exemption under Section 54F To adjust the STCG against the purchase of the Mumbai flat, you can claim exemption under Section 54F of the Income Tax Act, 1961.

This section provides exemption from STCG tax if: 1. _The asset sold is a long-term asset_: However, in your case, the Patna flat was sold within 24 months, so it's a short-term asset.

2. _The sale proceeds are invested in a residential property_: You can invest the sale proceeds in a new residential property, like the Mumbai flat.

Conditions for Exemption To claim exemption under Section 54F: 1. _The new property must be purchased within 1 year before or 2 years after the sale of the original asset_

: You purchased the Mumbai flat within this timeframe.

2. _The new property must be a residential property_: The Mumbai flat qualifies as a residential property.

3. _You must not own more than one residential property (other than the new property) on the date of transfer of the original asset_:

Ensure you don't own more than one residential property, excluding the Mumbai flat. Calculation of Exemption The exemption under Section 54F will be calculated as:

1. _The amount invested in the new property (Mumbai flat)_: This will be considered for exemption.

2. _The remaining amount, if any, will be taxed as STCG_: You'll need to pay tax on the remaining amount. Consult with a tax professional or chartered accountant to ensure accurate calculation and compliance with tax regulations.

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