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Tax impact

05 August 2021

In the month of December 2019, I have purchased house on the name of me and my dad by selling his old house. Can i sell this house( whivh is boight in 2019) now and buy another one? is there any tax implications? please guide me what shoild i do.

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7 Replies

Amit Maity (63 Points)
Replied 05 August 2021

As per section 54, transfer of LT Residencial house and purchase of one residential house or construct one residence house.
Time limit - Purchase (before 1 year or 2yrs of transfer) or construct within 3 yrs of transfer.
Exemption = purchase of new asset or amount deposited into Capital gain deposit a/c.

Provided that, if capital gain amount does not exceeds ₹ 2 crore, then the assessee purchase 2 Residencial house instead of 1 residential house.

Exemption disallowed- if the new asset is sold within 3 yrs of original asset transfer, then the cost of new asset will be reduced by amount exempted earlier.

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CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 05 August 2021

No you cannot sale the house now as it will lead to short term capital gains and no benefit of section 54 will be available to you for purchase of new house. You should sell the house after 3 years from 2019

nilesh borse (10 Points)
Replied 05 August 2021

What if i sale the House on same price (purchase price). Still STCG will affect?

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 05 August 2021

If no gain occurs then stcg shall not arise

nilesh borse (10 Points)
Replied 05 August 2021

Then i can sale it on purchase price. and buy new one now?

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CMA Poornima Madhava (CMA) (13112 Points)
Replied 05 August 2021

Originally posted by : nilesh borse
	What if i sale the House on same price (purchase price). Still STCG will affect?

In case of house, if you sell the house after 2 years (earlier it was 3 years) i.e. by Dec 2021, gain would be long term capital gain (not short-term). If you buy another house, you may claim exemption u/s 54.

But if you sell within 2 years, then STCG tax would be payable on gains. If you sell now at purchase price, no tax on capital gain would arise.

No restriction if you would like to buy another house but no exemption in case of sale of short term capital assets. Since there is no gain, this doesn't matter I think.