Capital gain
lina abood
(Querist) 07 February 2012
This query is : Resolved
Dear Sir,
On 1990 I had bought flat in my country from the money gifted to me by my family.
And again in India I bought 2 more flats, one which I am using it as my permanent residence and another one just vacant. So totally I owned 3 flats.
1-The flat which it is abroad, bought in 1990 and sold on Oct/2011
2-The second flat in India I registered on 27/3/2010 to save on long term capital gain tax i.e. I can’t sell it before 27/3/2013
3-And the third one I am residing in.
How do I avoid paying huge amount of capital gain on flat no. one
In case I sell flat no 2 after 27/3/2013 can I club the money I get from the sale of flat no1 and no2 and buy a new residential property by taking advantage of the capital gain tax law that states ‘one can invest the money within one year before sale or two years after selling’.
Please give me your suggestion.
A V Vishal
(Expert) 07 February 2012
You can club both the sale proceeds to invest in the new property. The LTCG is exempt to the extent of amount invested in the new property.
lina abood
(Querist) 08 February 2012
DEAR MR. VISHAL,
PLEASE JUST SEE THE TIMING OF MY SELLING AND COFIRM YOUR REPLY
THANK YOU LOTS
C. P. CHUGH
(Expert) 08 February 2012
Section 54(2) of the Income-tax allows you to buy a residential house within two years from the date of arising of a Capital Gains or construct within Three Years from such date, provided you do not own more than one house at the time of consturction or purchase of new house.
As per facts narrated by you on sale of your property no 2 on or after 27/03/2013 you would be left with only one house,hence you shall be eligible for deduction on investment in another house.
As regards Long Term Capital Gains from house No 1 you have option of either paying LTCG Tax now or you can deposit the Capital Gain in a separate designated account under the Capital Gains Deposit Scheme Account and utilitse the said money for the purchase or construction of new house on or after 27/03/2013.
You may check with your bankers whether they are authorised to receive Deposit under Capital Gains Account Scheme or not.
