(Querist) 10 September 2012
This query is : Resolved
we have recently sold our inherited agricultural land situated in maharashtra for a lesser consideration amount as it was encroached with illegal tenants and trespasser. Me and my mother got the share of my late father. Now be both are planning to buy a flat jointly with the amount receive. however the amount received is not sufficient so I am going for a loan for the additional amount required to purchase the flat. Please let me know can we both invest in the same property to avoid capital gain tax if applicable? we have also received a letter / certificate from the talathi in marathi which states that : MARATHI- "SADAR JAMINI HYA MAHANAGAR PALIKA HADDI PASUN SUMARE 8 KM ANTRAVAR AAHET. Is this wording correct? Also as per the census avilable on net the population of the said village is aroung 4000 only.
(Expert) 10 September 2012
Agriculture Land: agriculture land in rural area is not covered in definition of Capital asset hence no capital gain is applicable in case of sale of agriculture land in rural area .However capital gain tax is applicable if land is situated in urban area.
Investment in commercial property will not give you any exemption /deduction from capital gain.
Investment In Residential property : with Investment in residential property you can save tax u/s 54 F .But not same as agriculture land can .the difference between both the option are that in case of section 54 B (Investment in agriculture land) the amount to be invested only the amount of capital gain but in case section 54 F (investment in new residential house) net sale proceed is to be invested in the new Residential house.