Ronak Shodhan (Director) 14 June 2012

Capital gain tax on sale of commercial property

my question is this:

i have sold a commercial property (office space) in february 2012. There is a capital gain of approx. rs. 15 lakh. this is after indexation and it is a long term capital gain.

I want to find out the following:

1. to offset the capital gain tax, i need to buy another commercial property worth Rs. 15 lakh or can i invest in a residential plot scheme and purchase a plot for Rs. 15 lakh??

2. If i invest in a residential plot, are there any special conditions that i must follow, in order to make it a qualified investment against the capital gain from the commercial property.

i have been given unsatisfactory advice in this regard... if any one can tell me what is the exact law and requirement for offsetting capital gain tax in reference to sale of commercial property, i will greatly appreciate it...

thanking you,

Ronak

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4 Replies

Vineet (Director) 15 June 2012

you should not buy any commercial property to save capital gains tax. No exemption is available.

You can buy residential plot to avail exemption u/s 54F. There are few conditions:

1. You have to construct new house on this plot within 3 years from sale of old property.

2. You have to invest the TOTAL SALE CONSIDERATION and not long term capital gain in new house. For this you have to keep the remaining sale money after investing in plot in capital gains account with a bank. You can withdraw from this account only for payments in relation to construction of new house.

3. You should not have more than one residential house as on date of invstement in plot.

4. You should not acquire any other house (except the above construction) during next three years.

Sounds difficult. My advice is that you invest the LTCG in capital cains bond issued by NHAI or REC.

Akash Singh (Marketing Executive) 25 March 2014

If you are looking for commercial property to invest your capital gain then it's an commendable thought I must say but now before investing you have to think in which area you are about to buy the property. Like if I would have such idea then I must have looking for an commercial space for sale or shops for rent in Bhubaneswar, Odisha as I am a person from this city...so it will be helpful for me to look after my business easily....hence now you have to decide that what kind of business you like to start and where you want to start.

sanjay singhal (Dy general manager) 16 August 2014

if suppose we buy 02 bungalows worth the total sale consideration( the registry/stampduty will be paid as one unit) , than is it possible to get exemption against capital gain tax.

sanjay singhal

Lovish 27 July 2015

Hi All,

I have sold a commercial property recently, and about to invest in resedencial property in a different state ( sold in Delhi, purchasing in Haryana) are there any restrictions on the same?

if i invest the complete amount in the resedential property can i offset it vide exemption u/s 54F while buying a Flat or is 54F only relates to plot only.

Appreciate your valuable feedback,

Thanks,

Lovish