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[How to] Save Capital Gains Tax on Sale of Property in India

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Over the years, property is one of the high ticket items in one’s investment portfolio. Now the buying / selling are more frequent with good appreication. However, the investor needs to consider taxation aspects when buying & selling properties.

Any profit earned on sale of property is taxed as Capital Gains. The amount of tax depends of holding period of the property.

  Short Term Capital Gain Long Term Capital Gain
Holding Period Asset Held of less than 3 years Asset Held of more than 3 years
Tax Added to Income and taxed at Individual’s slab rates 20% after Indexation

For long term capital gain, tax liability is determined based on indexed cost of acquisition and improvement.  Check – Cost Inflation Index & Calculation

Date of Acquisition of Capital Asset

1) Completed Ready to Move Properties (Residential / Commercial / Land etc)

 Date of Acquisition – will be Date of Sale deed registration

 

2) Under Construction Properties  (Important to Read) 

 If the property is under construction, you don’t have the physical property yet. What you have is “RIGHT TO ACQUIRE” a particular property.

When you book a flat, you pay a token amount as Booking amount for which a receipt will be issued by builder.  Once the layout is finalised, letter of allotment is issued and an agreement to purchase is executed and registered.

If you have merely booked a flat in the building to be constructed with no particular flat having been allotted to you, you cannot be said to have acquired the right to purchase a specific flat.

It is only when the letter of allotment is issued that such a right can be said to have come into existence. The purchase agreement defines the rights between the parties, which have already come into existence after the issue of the letter of allotment.

Thus, the date of issue of an allotment letter gives a right to the intended buyer to obtain conveyance on the said flat so that it becomes an asset within the purview of the Income-tax Act.

The date of acquisition of the said asset (“Right to Acquire”) shall be the date on which the allotment letter is issued to the intended buyer.

Normally, in cases of sale of under construction properties, a tripartite agreement is entered into between the seller (who had originally booked the flat), the purchaser and the builder.   Under this agreement, the seller assigns his rights to the under-construction flat to the purchaser with the consent of the builder, the purchaser agrees to pay the balance of the original purchase price payable to the builder and the builder agrees to give possession of the ready flat to the purchaser directly.

The agreement assigns the right to acquire a particular flat.

IMPORTANT NOTE  Once the possession is given, then the new date of Sale deed registration of property will be treated as New date of Acquisition, as now you will have a NEW Asset. 

So if you intend to sell property in near future, it is better to sale before possession / deed registration. Otherwise, you will have to wait for another 3 years to get benefit of Long term capital gain.

Recently, High court has taken a view that – for calculating Long term capital gains, the date of allotment should be treated as date of purchase. Link

How to Save Capital Gains Tax on Sale of Property in India

 a) Invest in a Residential House (Buy / Construct)  (Under section 54F)

 The seller of the property can claim for tax exemption if he buy another essential property. However, the amount of investment & exemption depends on the type of Capital asset sold. .

If Capital Gains is from  Sale of  Amount to be invested
Residential property (Completed / Ready to Move) entire Profit (capital gain)
Under Construction Property / Commercial /
Non Agricultural Land
entire SALE Proceeds

 

The seller has two options, either he can buy another house within two year from sale of property else he can build a house in three years.   Buyer can also buy a house 1 year prior to selling the house and still can avail the benefit under section 54.

However, following conditions needs to be adhered

  • You can only invest in Residential property. This means you cannot invest in a commercial property or land to save tax.
  • You should not own more than one house prior to the investment.
  • If the new house is sold within three years, the deduction claimed will become taxable as a long-term gain.
  • if any additional house (other than the new residential house referred above), is purchased within a period of two years or constructs within a period of three years after the date of transfer of capital asset, then the original exemption will be taxed as capital gains in the year in which the additional residential house is acquired

Capital Gains Accounts scheme –   If you could not invest the amount in another property before due date if filing the returns, you can deposit the amount into a bank account under the Capital Gains Accounts Scheme, 1988. Such amount would have to be utilized for the purchase or construction of the new asset within the prescribed time period. Unutilized amounts would be taxable as income of the previous year in which the period of 3 years from the date of the transfer of the original asset expires.

2) Invest in Capital Gain Bonds (Section 54EC)

Irrespective of the type of property, here you nee to just Invest profit (capital gains) into Capital Gains Bonds. You can invest in NHAI or REC Bonds upto 50 lakhs in an year.

There is a Lock in of 3 years for such investment.  If you transfer or take a loan against these bonds within three years, the capital gain will become taxable.

Important Note –  If you have Capital gains from Under Construction Property / Commercial / Non Agricultural Land –    then this option is more beneficial as you need to invest only profit amount & not the entire sale amount.

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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The author is a Chartered Accountant and loves to write about Personal Finance, Wealth Management, Taxation etc. Disclaimer - The articles on this website is for informational and knowledge purposes and should not be treated as financial advice, Please consult your financial advisor before taking any investment decision.

327 comments

  1. I intend to buy a under construction property for investment purpose. The property will be registered immediately wherein the possession will be after 2-3 years. my queries are :
    1) if i sell the property after taking the possession which will be after 3 years from the date of allotment which also is the date of registration then will it be liable for long term capital gain or is it that since the possession has happened, so the 3 year period for the eligibility of long term capital gain will start a fresh from the date of possession even though the property has been registered 3 years back when it was under construction.
    2) If i sell it in under construction status after 3 years from the allotment date which also is the date of registration then will it be liable for long term capital gain or is it that since the construction has taken more than 3 years and therefore benefit of long term capital gain may not apply.
    Please advice.

    • 1) if you sell the property after taking the possession, then you will have to wait for 3 years after dat eo possession to get benefit of long term capital gain.

      2) if you sell under-construction property, you can sell it after 3 years from allotment date & it will be treated as Long term capital gain.

      • dear sir,
        please let me know about the capital gain. if the house property purchased in 1996 constructed in 1997 sold out in the year april 2013 and again constructed the house will full investment of proceeds received.
        now again the house property sold after two year occupation
        please let me know about the capital gain liability or any other process to save the tax
        again we are in process to buy a new house. please guide
        thanks
        manish

        • H Manish, If the new property is sold Isold within three years, the original deduction claimed will become taxable as a long-term gain.

          In this case, you will have to pay LTCG of the sale of old property.

  2. Hi,
    Thanks for the informative article. I’m buying a flat where the seller did agreement with the builder in 2009, got possession in 2011, but did not do sale deed yet (NRI who didn’t have time to complete). Now he says 3 year holding period starts from possession date. Whereas your article says 3 year holding period starts from sale deed date. Which is right? And is there an official IT site that clarifies?

    Thanks.

    • the holding period is always debatable and depends on the facts of the case.

      However, in general practice date of registration and date of possession is same but in some cases it may be different so if amount is paid and possession is given even registration is pending then transfer date will be date of possession by the purchaser under section 53A of transfer of Property Act as explained in definition of “transfer” under Income Tax Act

  3. Can I claim capital gains exemption for multiple houses held simultaneously?

  4. I have a residential flat, a commercial shop and a NA land each one current price 20 lac each. All bought more than 10 yrs ago. Now I intend to sell all three and buy a commercial property of 60 lac as it is giving me good rentals. How do I go about it n how will capital gain apply on me. ..

    • You need to calculate the Capital gain for all 3 properties.

      As you will invest the proceeds into commercial property, you cannot save any capital gain tax.

  5. Dear Sir,

    I need advice on a property transaction-selling an under-construction flat for which I also had a Housing Loan.

    I has bought the under-construction flat in June, 2010 and sold it in Apr,2014. In between I had taken a Home Loan too for which I was paying pre-EMIs. When I sold the flat in yet under-construction stage, I paid of the Bank Loan and have invested balance proceeds(Profit+ Principal) into Bank FD till I find another suitable property to invest.

    To avoid any Capital gains, what percentage of above amount do I have to invest into new property?

    Please advise

    • For capital gains from sale of under-constructed property, you need to invest the entire Sale amount.
      If you donot invest in another residential property in same financial year, then you need to put the money in Capital gains savings scheme till the time you buy the property.

      • To avoid capital gains I can buy resale flat also know.or should I buy only new or under construction.

        • Hi Ramesh, To save Long term capital gain tax, you can invest the Capital Gain amount in any residential property (new/ resale / contruction).

  6. I invested in an under construction property in 2009. Letter of allotment : may 2009
    Registration and Final sale Agreement : Mar 2012 . Letter of possession for fit out : Oct 2012
    Letter of final possession : February 2014
    For long term capital gain to be applicable in place of short term cap. Gain what date would be considered for
    the 3 year period

    • As the property is finalized in Feb 2014, the date of possession will be treated as Acquisition date for house property asset.

  7. Dear Mr. Vivek, 1st of all I would like to thank you for such a detailed clarification on the subject. I have couple of queries:

    1. I had purchased a flat in Calcutta in December 2011 (possession was given in August 2012). As I wanted to sell it after 3 years, I have not done the registration till date. What would be the calculation for the date of acquisition then (as I have not done the registration, and the builder would transfer the property in the proposed seller’s name by taking the transfer fee from me). Would I be able to claim under Section 54F? (I own as second applicant 2 other properties that are owned by parents in Calcutta). I had purchased another flat (solely in my name) in Bhubaneswar in January 2013 by taking a bank loan and another flat in Calcutta in November 2014.

    2. In case in future, I sell all these 3 flats owned solely in my name and club all the amount to construct a house on a land owned by me, then can I do so and avoid long term capital gains that would accrue on all these 3 flats?

    thanking you in anticipation of your time and responses

    • 1) As the possession is given, the date of possession should be treated as Date of Acquisition
      2) You cannot claim benefit of 54F as you already hold other properties.
      3) Once you sell your 3 properties, and invest in house, even then you will not be able to claim as you are owner of other properties jointly with your parents.

  8. I already own one house and one flat .I want to sell the flat before completion of 3 years. can I invest the short term capital gains to buy a new flat/house?

    • Short term capital gain on House property is taxed as per your normal tax slab. You cannot claim any tax exemption by investing in new flat.

  9. Hi Vivek,

    I purchased under construction property (flat) in Noida for 45L on October 2010 and sold the same for 1cr in Dec. 14. (Not got posesion yet) Allotmement was on October 2010.

    Question 1: would I get the benefit of indexation ?
    Question 2: How much money would come under LTCG ?
    Question 3: What shall I do to save LTCG tax ?

    Many thanks in advance,
    Akash

    • Hi Akash,
      1) Yes you can claim indexation
      2) you need to calculate LTCG based on the computation given in post above
      3) You can save the capital gain amount if you invest in options provided in post above.

      Feel free to ask further specific queries once you go through the post in more details.

  10. I invested 30 lakhs in a house in Mumbai in 2000, I spent further 10 Lakhs ( in two phases, 2000 & 2008) on interiors. I have also paid 12 lakhs has housing loan interest which has been claimed as a deduction in under 80C. I want to sell the flat for 120 Lakhs now. What all can I claim for income tax deductions & Capital gains.

    • Hi Leena, You cannot claim the amount paid for Interiors unless it is for some construction.
      You need to calculate the capital gain based on Sale value ( 120 lakh) and the indexed cost of acquisition.

      You can save the capital gains if you invest in certain options as given in post above.

  11. Dear Mr.Vivek

    I have purchased new under construction property and registered in March 2012. Posession of the flat is in Feb 2015.
    I own a small flat(purchased in 2003) which i want to sell in Feb/March 2015(after posession of new house) and use these amount in Paying of loan for new property.

    Question) Is Capital Gain Tax applicable.?

    Thanks in Advance.

    Vipul Amin

    • Hi Vipul,

      In my view, you cannot claim capital gain exemption by paying home loan on property registered in 2012.

      I understand that the possession is in 2015, but property is registered to you in 2012

  12. My query is on commercial property situated in Faridabad. A property owned jointly by 3 family members and given for rent for commercial use. Now, they want to sale the property for 1 cr , which they had purchased for 25 lacs in the year 2001. Now, whether they can (1) avail the tax benefits by investing the entire sale proceeds to another commercial plot ?
    they dont have any commercial property except residential house in their joint name.

    • You can save the Long term capital gain from sale of commercial property using following options
      1) If the net consideration (not merely the gains) is invested in purchase or construction of a residential house.
      2) the Capital gains are invested in bonds of NHAI or REC within six months from the date of transfer. However, the exemption is limited to Rs 50 lakh in such a case. It has been recently clarified in the Finance Act 2014 that the limit of Rs 50 lakh is in aggregate and applies to total investment. The exemption up to Rs 50 lakh can be claimed only in one financial year, even if the specified period of six months covers two financial years

      You cannot claim the benefit by investing in another commercial property.

      • Hi Vivek, If after sale of commercial property a time of 18 months have passed without investing the capital gains, can one still invest in NHAI Bonds within 2 pear period?

        • Hi Ashok,

          You need to make the investment before the IT return date else put the money in Capital Gains scheme. When did you sell the commercial property?

  13. Hi Vivek,

    Thanks for the succinct information. I have a query for your advice. I bought a flat in 2005 and am servicing the home loan on that. It’s self occupied.i intend to buy a new flat bigger and move to that ? I have put the first flat on sale and am also going ahead with 2nd flat buying.

    In normal course, I am expecting the first flat to be sold and I want to invest the proceeds in buying the 2nd bigger flat. However, let’s say the sale of first flat is delayed and is sold later than buying of the 2nd new, will i be able to claim LTCG ?

  14. I booked an apartment and got the allotment letter on Apr 30, 2011. Over the years I paid ~34 lakhs to the builder. However, I sold it to a buyer (via tripartite agreement) for 48 lakhs in Apr 4, 2014. I guess it would be short term capital gains.

    I am constructing a house now. Can I claim the entire 14 lakhs profit as exemption (due to the house construction)?

  15. I own a land in Kanpur which is my parental property. I am entering into a Builder Agreement in which builder will construct 12 Flats on the land. As per the agreement, builders will have all the rights for construction and taking approval from various authorities. On the date of agreement, Builder will give an amount of Rs. 20 lakh to me as token money. On completion of construction, Flats will be equally distributed between me and Builder i.e. 6 flats will be given to each. Out of 6 flats recieved by me, i want to retain 3 flats and 3 i want to sold out. Now pls guide me regarding tax implications on all above arrangements and suggest any tax planning which may be used here to save tax.

    • As the nature of transaction is complex, it is advisable to take help of local CA so that he can understand the details of facts and then decide accordingly.

  16. I have purchased a house in current month (Jan 2015) on which I have a loan running.

    I already own a house which I bought in April 2011. If I sell this house and use the capital gains from this sell to pay the loan will I be exempt from CG tax ? I don’t own any other residential property and I don’t intend to sell the recently bought house for long term

    • Hi Mohit, If you sell the 2011 flat, you will be able to claim exemption regarding your capital Gain tax on the basis of bought property in Jan 2015.

      • Thanks Vivek for the info.

        If I bought the property for 10L and sold for 20L, can I just invest the capital gain i.e.10L to get this exemption or the whole 20L must be used.

        • If you are selling the property after 3 years (long term capital gain), then you need to invest just 10L (gain) in another property.

  17. Hi,

    Please help me out.

    I own only one apartment and had booked another apartment in 2008 for total consideration of 25L. Letter of allotment was issued in Oct 2008 and purchase agreement was executed in Sep 2011. I sold this apartment in Oct 2014 as an underconstruction property for 60L (possession not yet received). For the property I had paid the builder only 15L till the sale. It was agreed that the new buyer would pay remaining 10L to the builder and I shall receive 50L.

    Now I have 2 questions.
    1. As letter of allotment was issued in Oct 2008. That would be my date of acquisition.
    2. How much money I need to invest in capital gain bonds in order to save LTGS tax.

    I appreciate your help.

    Deepak

    • 1. yes, you can treat 2008 as dat eof acquisition
      2. only capital gain profit needs to be invested in Capital gains bond to save tax.

  18. Dear Sir,

    I have two flats registered in the joint names of self and wife purchased in the year 1998 & 2004. I am claiming IT rebate on interest on loan in my tax returns till date. My queries are;

    1. If we dispose both the flats in the current year 2014-15 (one in Feb’15 and another in March’15) , profits on sale of both the properties say Rs 15 Lakhs each shall have to be deposited either immediately or shall I keep the amount for not more than 6 months) in my bank account;

    2. If I deposit the gains in CG Exemption account, can I withdraw the same for the purpose of purchase of another property in the next financial year;

    3. Is there any problem in claiming because of more than one house.

    Please guide.

    • 1) you can deposit the capital gain within 6 months, but you need to do it before filing the return so that you can claim the benefit.
      2) you can use the amount in CG scheme account to buy property in next financial year
      3) I think you need to open 2 separate account for 2 sale of houses.

  19. dear sir i am buying a agriculture land of Rs 1000000 lk in 1.1.2015 and presnt i want to sale my another agricultural land which i bought in 7.12.2012 for Rs 8000000 lk thn i will get benefit of long term capital or not

  20. I booked an underconstruction flat on 2012 ( sale agreement done on my name). Dec 2014 I got possession letter. Also I had a home loan for the property. For some reasons I wanted to register the property on my mother’s name. So builder asked to get NOC from bank and bank in turn asked to pay off the loan to get NOC. Me and my mother took off 10.5 lakh loan against some fixed deposit security from a nationalized bank and paid off the remaining loan for the new flat and did registration on her name Jan 2015. The total cost of the property is approximately 40 lakh.

    We also have another old flat ( registered on the name of my mother and me). We want to sell it now. Approximate market value is 30 lakh. Incase we sell it do we need to pay capital gain tax ? This old flat was bought on 2007 at Rs 10 lakh. If yes, then what are possible measures to save capital gain other than investing in bonds as per sec 54 C.

    • For the sale of your old flat, yes you need to calculate the capital gains tax.
      The various options to save tax is given in the post above.

  21. I purchased a residential plot in 1991 for around Rs 2 lacs. Over last 24 years I also paid around 3 lacs for its maintenance.
    Present sale price of plot is around 2.20 lacs. Is there any provision that without availing cost of indexation, I can pay Long term capital gains tax @ 10%.

    • Hi yash, For immovable property, there is no option to pay tax at 10% without indexation.

      So for land sale, you will need to pay tax @20% after taking indexation benefit.

  22. I purchased a residential plot in 1991 @ Rs 2 lacs. Over last 24 years I paid Rs 3 lacs for its maintenance.
    Present sale price of plot is Rs 220 lacs. Is there any provision that without availing cost of indexation benefit for calculating tax liability, I can long term capital gain tax @ 10% instead of 20% (with benefit cost of indexation)

    • Hi Yash, For immovable property, there is no option to pay tax at 10% without indexation.

      So for land sale, you will need to pay tax @20% after taking indexation benefit.

  23. If I sell my house and my office and buy a bigger house, can I save on capital gains tax on both the current properties? Both are for more that 4 years?

    • Hi Ajay,

      I think that if you invest the ENTIRE SALE proceeds from both the properties to buy a residential property, you should be able to claim capital gain tax.

  24. Dear Mr. Jain,

    I would greatly appreciate if you can help me overcome my problem. I want to buy an apartment in Bangalore completed some 4 years ago from M/s. XYZ Pvt. Ltd., Mumbai. XYZ signed two agreements with ABC Ltd., (Developer – Public Listed company) in 2008, one land sale agreement value Rs. 32 lakhs, and the second construction agreement for Rs.50 lakhs.

    XYZ have fully paid all their dues to ABC uptodate amounting to some Rs.90 lakhs (32+50+maintenance charges etc.,). The flat in question is not yet registered. The sale price I have agreed with XYZ is Rs.1.35 crore and they are prepared to issue NOC and Letter of Assignment asking the Developer to execute the sale deed in my name (individual).

    ABC have stipulated following two conditions:

    1. they will prepare the sale deed ONLY for sale consideration of Rs. 32 lakhs (or its corresponding current price of Rs.36 lakhs) – not 70 lakhs not 90 lakhs. They contend they are ONLY required to execute the sale deed based the land sale agreement alone excluding the construction agreement. Reason: The amount they received from XYZ against the land sale agreement alone will be reflected in the sale deed.

    2. I will be required to pay stamp duty based on the current guidance value of some Rs.75 lakhs. However, the figure Rs.75 lakhs will not appear in the sale deed but the actual stamp duty paid will be recorded on the back of the sale deed.

    My problem is I can only pay Rs.1.35 crore to XYZ from the funds lying in my Long Term Capital Gain Tax account. I want to pay stamp duty on Rs.1.35 crore. How do I go about without breaking any laws ?

    • Hi Prahlad,
      It doesnot sounds correct.

      1) Assuming there are 2 agreements, and the sale deed will be prepared for land sale separately for 36 lakhs. In such case you will be registering land and not house ?

      2) If you are registering the flat, then separate or combined sale deed should show at least 75 lakhs.

      Though not correct, but some seller take the money above the stamp duty value in Cash as unaccounted money. That’s not correct and legal ad also difficult for buyers.

      In your case, you should have legal deed for atleast 90 lakhs (the amount paid to builder in cheque)

      I suggest you also contact a local advocate / CA specialized in property matters.

  25. Sir

    I own 2 flats both bought 4 years ago, one i live in and second given for rent. I want to invest in a new flat in april 2015(ready possession). within 1 year of buying this if i sell my 2nd flat can i claim CG exemption ?

    • One of the condition for exemption is that “You should not own more than one house prior to the investment”.

      If you buy 3rd house, then you will not meet this criteria.

  26. i purchase a residential plot for 7 lakhs + 50,000 registration fees during the year 1998. i sold it during 2014-15. at rs 48.5 lakhs.How much i have to invest in buying a flat . Is it with registration fees or with out?
    now suppose i buy a house for 40 lakhs without registration fees is the entire amount ie 48.5 lakhs taxable under capital gain or it is only 8.5 lakhs ?

    • Your indexed cost will be approx. 22 lakhs & sale amount is 48.5 lakhs, so capital gain will be Rs 26.5 lakhs
      To save capital gain, you need to invest atleast 26.50 lakhs in new house.

  27. I jointly own a flat with my wife. I booked one under construction flat (flat A, on my name alone) in 2010 (registered), which continues to remain under construction.

    Recently I have booked another flat (flat B) in 2014 in joint name with my wife – the purchase agreement was signed with the builder in November 2014 and flat registered in December 2014. I am expecting to receive possession (OC) in July 2015.

    I plan to sell my current flat (jointly owned) to pay off the housing loan taken on purchase of the flat B. What would be treatment in terms of capital gains tax? Would I be exempt if I sell the current flat within 12 months? Also this 12 month period would be counted from which event? Sale agreement/ date of registration/ or possession? Also which date would be counted as date of sale?

  28. We have sold three properties in nov 2014.
    1) Home (me n my wife owned equally). Capital gain is 1.42 cr
    2) off (I owned). Sold in 1.06 cr & capital gain is 71 laks
    3) off (my father owned). Sold in 97 lakh & capital gain is 69 lakh

    My query is, we have purchased two residential flats in under construction buildings now on following names (both flats are on same floor n have one common wall)
    1) Flat1 ( me n my wife own). Purchase cost would be 1.65cr
    2) Flat2 (me n my father own). Purchase cost would be 1.35 cr
    Should I save capital gain of all our three properties, which are sold? Or you have any another suggestions. Plz tel me

    • Waiting for ur reply

    • 1) Home ( you & wife) owned sold – capital gain offset by investment in flat 1
      2) 2 office owned by you & father – for capital gain saving, you need to invest the entire sale proceeds i.e. 2.03 crore . But the FLat 2 is only 1.35 crore. so on balance you will need to pay capital gain tax.

  29. Dear sir ..
    i have booked a flat and pay the token money to builder builder eusue a recipt to me and agriment copy can i claim that amount for deduction in incom tax? I have take a pf loan and thus i pay that token amount please advice me

  30. Dear sir,
    I have worked as teacher in govt. school i have booked the flat and pay the token to builder of rs. 250000 and make sathe karar (agriment) can i claim this amount as myy deduction in income tax please advice
    thanking you sir

  31. Hi, Mr Vivek,

    Seeking your valued guidance in the following case :

    Brief history of the case :

    1. Purchased a plot of land jointly with other partners in September 2006 by investing Rs.3,00,000/- (own contribution) for developing a multi-storied building.

    2. Due to some litigation, the project got held up for some time. Meanwhile, entered into an MOU with a developer who agreed to complete the project and deliver a flat on completion.

    3. Deposited a further total sum of Rs.10,85,000/- in instalment during May 2010 to October 2010 for construction work.

    4. On completion of the project, flat was allotted through lottery and possession was given in June 2011.

    5. Eventually, the property (flat) was registered on 28.02.2012 by a Deed of Gift (the flat owner being also a part-owner of the land). Stamp duty and registration cost spent RS.1,38,000/-. Govt. valuation of the flat for the said purpose was Rs.22,64,140/-.

    6. On December 2014, the flat was sold at RS.25,00,000/-. Govt. valuation for registration of sale deed this time was Rs.43,06,498/-.

    Computation of Capital Gains

    Based on the above details, the capital gain has been computed as under :

    1. Indexed cost of land acquired in 2006-07 = 300000 x 1025/519 = 5,92,486

    2. Indexed cost of construction (2010-11) = 10,85,000 x 1025/711 = 15,64,170

    3. Indexed cost of registration/stamp duty (2012-13) = 1,38,000 x 1025/852 = 1,66,121

    4. Total indexed acquisition cost = 5,92,486 + 15,64,170 + 1,66,121 = 23,22,677

    5. Property sold at Rs.25,00,000

    6. Capital Gains = 25,00,000 – 23,22,677 = 1,77,323

    Queries : 1. Is the above computation correct? If not, what would be the correct amount of capital gain?
    2. Whether Govt. valuations are required to be taken into account while computing CGT?

    • Hi Amal,

      I suggest that you take help of a local CA. Because there could be fine line between capital gain or business income.
      If it is treated as Business income, then there is no indexation or long term capital gain.

      Even if it is capital gain, then the 3 years of long term capital gain may be taken between first registration of flat and possession on sale. which is less than 3 years.

  32. Dear Vivek,
    I am Australian Citizen. I have got few properties in India which I had purchased before moving to Australia about 15 years ago. I want to sell them and invest in properties in Australia. Can I avoid capital gain tax in India by investing in properties in Australia? Kindly advise.

    • Hi Shankar,

      For capital gain on sale of properties in India, you cannot claim exemption by investing in Australia.
      You need to invest in residential property in India or Capital Gain bond ( which has 3 year lock in)

      I think the best way for you to invest the capital gain in India for 3 years in capital gain bonds. The interest is 6% p.a.

  33. My wife mother’s had regsitered her Will for a property in March 2008 for her daughter. Mother’s died in May 2008 and the Will has been probated on March11, 2011. What would be date of acquisition of the property by my wife: date of registration Will Vs Date of Probate?

    She has constructed some flats over the building and sold them in 2014. What would be the basis of computation of capital tax: short-term and long term?

    • Hio Ravi,

      For the purpose of capital gain computation the date of acquisition will be the ORIGINAL DATE OF Purchase by your wife’s mother.

      • Thank you, Vivek ji.

        I have another few questions related to the following situations.

        The land about 4000 sqft was bought in 1976, financed by me and my wife from our NRE account. Also, during years 2002-2004 we have develped the land and constructed three flats (one flat on the ground floor) and two on the Ist floor under the approved plan by the muncipality. In 2012 we sold one flat on the first floor. and used the money to construct 4 flats further on 2nd and 3rd floor. The ground floor flat has been demolished in 2015 to provide parking space. This has been done based on the revised approved plan in the city official. Three flats on the 2nd and 3rd floor were sold in 2014. I would like to retain one flat for our use in the building.

        The questions are:

        (1) Do we have to calculate the capital gain for the land and flats separatley?
        (2) Can we deduct the construction cost for the 6 flats in the building from the total sale valuation of all these flats?
        (3) Can we deduct the capital loss for the flat on the ground floor which has been demolished in order to provide the parking space.

        Would you like to prepare the tax retruns in India for us?

        Ravi

        • Dear Mr. Jain,

          Please provide me your response to my some questions raised on Feb 19,2015. Thank you
          for your help.

          Ravi

        • Hi Ravi,

          1)While calculating capital gain tax, you should add the proportionate cost of land and flats.
          2) You need to index the cost of land and construction cost based on the year in which it is incurred.
          3) As the ground flat is not sold, you cannot claim the capital loss.

          • Dear Vivek Ji,

            Thank you very much. Your inputs related to my questions are very helpful to
            estimate the capital gain.

            Ravi

  34. Is there any tax benefit if i sell a plot of land in Bhiwandi which was purchased on 20th December 2012. Paying tax using slab rates will be expensive for me…Please help….

    • if you sell the plot before Dec 2015, it will be treated as short term gain and will be taxed. no tax benefit is applicable.

      • Mr Vivek,

        I have two queries :

        1. I have purchased a under construction residential flat (registered) in 2011. The final possession is expected sometime later in 2015. The cost of the property went up due to fungible and additional corridor area added to the flat. The additional agreement for the incremental amount will be done before the possession. If I sell the flat immediately after possession, I need your expert advice on how it will be treated from capital gains point of view. Should I wait for additional 3 years from the possession date.

        2. I have also procured an under construction commercial property whose agreement was done in 2012 and possession is due in early 2016. If I sell the property on possession and re-invest in residential property, how will my capital gains be treated.

        Would appreciate your expert advice on the above pls.

        Thanks, Bankim

        • 1) TO qualify as Long term capital gain, you shoukd wait for 3 years after possession before selling the property. Otherwise you can sell it just before the possession.

          2) You need to invest the entire sale proceeds from the commercial property into a residential property to claim the capital gain benefit.

  35. Hi Sir,

    My father sold a huf property in dec-2014. He got capital gain around 11 lakh, Can you tell me how we can save tax on capital gain. i have recently booked a flat( under construction property). Can my father invest his capital gain amount in same property by declaring himself as co alotte?

    Waiting for your reply.

    Thanks

    • Hi Sir,

      My father sold a huf property in dec-2014. He got capital gain around 11 lakh, Can you tell me how we can save tax on capital gain. i have recently booked a flat( under construction property). Can my father invest his capital gain amount in same property by declaring himself as co alotte?

      Waiting for your reply.

      Thanks

    • Hi Varun, If your father is co-owner in the new property & invested money in that new property,he can claim deduction from his capital gain from sale of another property.

  36. I did not answer for the following query from you. Kindly respond.
    House purchased for Rs.39,000/- in 1970. Added two rooms in it in 1994 for Rs.1,25,000/-. Today, I am offered sale price of Rs.67,00,000/- . What would be capital tax payble and how much infr bond be purchased to nullify the tax. Urgent reply would be highly appreciatged. Thanks. MRJoshi.

  37. my query: House purchased in 1970 for Rs.39,000/-.Addition of two rooms in 1994 at the cost of Rs.1,25,000. Intend to sell in Feb,2015 for Rs.67 lakhs. How much cap.gains tax after considering indexation. To nullify the tax burden, how much infra bonds be purchased. Thanks for early reply. MRJoshi

  38. Dear Sir,

    I had purchased one property (A) jointly with my wife in 2004. Subsequently I (single ownership) purchased another under construction property in 2010. The property has since been delayed and remains under construction.

    Recently I have purchased another property (B) jointly with my wife taking housing loan. The purchase agreement has been done on November 2014, while property registration has been done in December 2014. The property, currently under construction, is likely to be completed by August 2015 (with OC).

    I now intend to sell property A and repay the housing loan on Property B.

    Would I be eligible to save on long term capital gains tax on sale of property A? Also as I understand I need to sell the property within 12 months of purchase – this 12 months would be calculated from which date – date of purchase agreement/ registration date or OC date? Many thanks in advance.

    regards

    • On sale of property A, any capital gain tax can be saved by investing in property B. as long as Property A is sold within 1 year of Nov 2014 (agreement date)

  39. Hello Vivek,

    I am planning to sell my current flat (bought in 2009) and negotiating deal in all most ready flat. In this new flat, builder has allowed owners to do furniture, install AC or any other fit-outs etc however formal Occupation Certificate from BMC is pending. I am working on sale amount and asking current flat owner to wait till OC comes before we execute sale deed. Owner wants to sell flat asap and not willing to wait for OC. Will Short Term apply to the current flat owner if he sells it to me before formal receipt of possession ? In legal terms, what is termed as possession – receiving of offical letter from BMC or actual possession of the flat by the owner ?

  40. I booked flat in 2012, got loan from Bank, Paid 95% amount to builder, I will get possession in Dec 2015 and will done registration in Dec 2015. I have another plot (holding more than 3 years) . can i sell plot to pay 5% to builder and registry of flats before 2015 and save long term capital gain tax. Please advise

    • On sale of plot, you can claim the capital gain benefit only if the investment is within 1 year prior.

      As you invested in the flat in 2012, you cannot use this investment for claiming capital gain benefit for plot sale in 2015.

  41. I have purchased a new underconstruction property in Feb 2015.Posession of flat is in June 2017.
    I will register this property in October 2016.
    I own a flat(purchased in 2005).I intend to sell in March/April 2016.Is capital gain tax applicable?
    Thanx
    Sujata Maheshwari

    • I hv purchased a underconstruction property in Frb 2015.Posession of flat is in June2017.
      I will register this flat in October 2016.
      I own a flat(purchased in 2005).
      I intend to sell it in March/April 2017.Is capital gain tax applicable?
      Thanx
      Sujata Maheshwari

      • If you sell the flat (purchased in 2005) in 2017, you may not be able to claim the capital gain exemption for investment in flat in Feb 2015.
        To claim the exemption, you need to invest in that property within 1 year prior to the sale.

  42. My brother has sold his 4 NA residential plots in October 2014. Please advise where he should invest to save on Long term capital gain. He has got a long term capital gain of Rs 50 Lacs from sale of these 4 plots.

    • You will need to invest the entire sale proceeds in
      1) a residential property or
      2) capital gain bonds

      See details in the post above.

  43. Hi Vivek
    My wife and myself, we are both Indian born british citizens. We moved to UK about 20 years back.
    While in India We had acquired 3 properties. 2 residential (one in self name and the other jointly) and 1 commercial property in self name.
    We now plan to sell these, one by one in each financial year.

    Can we claim an exemption from LTGC by
    1) reinvesting the capital gain from each sale in purchasing a residential property in India only within the specified time duration.
    And partly
    2) invest in capital saving bonds. Understand the limit is 50lacs per person per financial year?

    Kindly advise

  44. dear Sir,

    I sold residential plot in the month of march 2015 value approx 40 lacs . I want to buy residential Plot . It will come into tax exemption under 54F . if no than what are the other option to take the exemption as i am interested to construct the house . First I want to buy the plot than want to construct the house /.

    Ranjeet

    • You can claim t exemption, if you construct the house within 3 years. You need to deposit money in Capital Gain Account scheme.

  45. Dear Vivek,

    Thanks for such a detailed article. Its indeed very informative.

    I purchased a plot to construct house in 2004, registered plot and constructed house by 2005. I sold this house in December’2014.
    I am planning to buy an apartment. I have a couple of questions:

    1) If I buy a “just launched” apartment which will be ready for registration/possession in 4-5 years, will I be able to claim long term capital gain benefit? Builders are OK to issue allotment letter after initial booking amount is paid (that means, I can get apartment allotment letter within weeks of booking). For the sake of clarity, we can say that allotment letter will be issued in March’15 but apartment will be ready for possession or registration in year 2019-20.

    2) If answer to above question is yes, do I need to pay all the money (proceeds from sale of previous property) upfront or I can pay as per builder’s payment schedule which could go upto 2019-20

    Thanks
    Deepesh

    • 1) You can claim the benefit if the property is constructed within 3 years. However, in case of under-construction property, court has allowed deduction even if the construction took longer than 3 years by builder.

      2) You can make payment as per builder schedule. However, you need to put the money upfront into the Capital Gains Account scheme.

  46. Sale of commercial rented property has how much tax to be paid. Is there any thing as goodwill amount which has tax exemption.?

    • The tax will depend on duration of property held. – whether long term capital gain or short term capital gain.
      You cannot claim any good will amount as tax exemption. You can calculate the total cost of acquisition depending on the price paid.

  47. I have purchased one flat in 2005 & presently living in it. Also I have purchased under construction 2nd flat in 2012 (registration done in Sept-2012) & I will get possession letter for this 2nd flat in April 2015, But I want to sell this 2nd flat in Oct-2015 ( 3 years after registration) & want to invest in a new flat after Oct-2015 ( within 2 years after Oct-2015) can I claim long term CG tax exemption ?

    • Note that for 2nd flat, the possession date will be treated as date of acquisition for calculation of capital gain.
      So if you sell the 2nd flat in Oct 2015, then it will be short term capital gain. You cannot claim exemption for STCG by investing in new property.

  48. Sir
    Good morning!
    Will you please answer my questions?
    (1) My mother had purchased a plot in year Jan 1979 for Rs. 678.
    (2) My mother sold this residential plot in Jan 2015 for Rs 10.00 Lacs.
    (3) My mother is a retired Govt employee n gets pension which is about Rs 7000/ per month.
    (4) My mother has never filed income tax return in the past.
    (5) We do not know how to save tax on this gains.
    (6) My other owned a house which was purchased in 2001. She wants to utilise this gain for construction of first floor over this house to save tax. Is she allowed for this?
    (7) Please tell me what are the options available with my mother. She is a 74 years old lady and cant be able to take decesion. Please help us.
    (8) In case, she simply wants to pay the tax, what will be the procedure and does she still need to file income tax return. Which form will be used in that case. How to reflect gains and taxes etc.
    (9) Please do reply me through e-mail. I am in army and working in remote area, so cant access your post.
    (10) Can she purchase a new land or house . How much will be available for new purchase.

    Please answer one by one questions.
    Regards
    Shibham,

    • Hi Shubham,

      Long temr capital gain on the property will be approx. Rs 10 Lakhs. To save capital gain, you need to invest either in new residential property or construct the property or invest in capital gain bonds for 3 years.

      Whether you pay or save tax, you need to file return in ITR 2, otherwise you may get income tax notice for selling plot and not filing the returns.

  49. *LTCG : Long Term Cap Gain
    *STCG : Short Term Cap Gain
    (as referred below in the lines)

    Hie Sir

    First of all let me congratulate you for an article such as this and regularly answering the question. For people like us who has partial knowledge these are very valuable tips. Now straight to the point

    Note : All queries related below refer to second sale fully constructed flats with all papers and deeds/titles in place which are more than 10 years old (both sale and buy)

    1. I had bought a flat (my first property) and on bank loan + personal funds- the registration was done on the same date of SALE DEED – which is in April 2013 . The amount I acquired was for 47 lacs PLUS with stamp duty and registration costs + miscellaneous – the total cost of acquisition went upto approx 51 Lacs .
    Note Loan amount was 41 lacs of which 40.26Lac still remains and being transferred to the buyer of my flat – Person X
    2. I have just entered a negotiation with Person X who has agreed to buy my property and has already paid 20% of Sale Agreement (just yday) and has agreed to transfer the loan to his name of the same amount as outstanding(40.26 L). The Sale DEED with registration looks highly likely to be completed in April 2015 (exactly 2 years from DOPurchase) – thus the property comes under – STCG bracket. The Sale consideration is 53 Lacs on Sale Deed (I presume the registration and stamp duty is borne by buyer so have not included here)
    3. I intend to put the entire money I receive in total to another property which is priced higher than the money I am receiving from my sale . Say if X is the amount I am looking at investing in the flat am buying it is definitely higher than 53Lacs which is the total sale consideration of the flat am selling now. (X > 53 Lacs)
    4.This I intend to do from within next few months , however the person “Y” from whom now I am buying the flat (owner) -he had acquired the possession of the same and made a sale deed in 2007 but the registration of that sale deed was done in Jan 2013 (which is approx 26 months back) . He is intending also to use this money which I will give on buying the flat (full amount of proceeds) plus more funds from his business to invest in another larger property of his own. (Residential flat) – completing the sale in Jan 2016.
    So I have few questions –
    a) Because I do come under STCG bracket , will I be taxed even if I put the entire proceeds plus more money in buying another property soon . If yes , what is the amount I will be taxed on 53L-51L = 2L (added to my income slab)? OR is the calculation something else. If no , is there a time period within which I have to invest it in.
    b) The person “Y” who is now selling his flat who had actually acquired the property in 2007 (Sale deed is there of 2007 dates) with details of bank loan in sale deed dated 2007 – however registration was done in Jan 2013 . So will he come under STCG or LTCG bracket – since he did the Sale Deed in 2007 however registered in 2013. In the case its LTCG the story ends but if its STCG he falls under he wants to wait till January 2016 before taking the full money from me so that it will complete 3 years for him safely.
    -In the meanwhile he wants to get into an agreement with me where I commit to him around 20% of total sale consideration , keep it hanging and the sale deed is done in Jan 2016. In such a case is there any advantage or disadvantage I have for keeping the money of my sale of flat with me till Jan 2016 .
    c) Can I keep the amount I receive from selling my property in my saving bank a/c or should I have to open a CAP GAIN account in a government bank (like SBI etc) and keeping the money there till I use it to buy another property be of any help in saving STCG tax? Is dispatching the whole money in a specified time-frame a factor (eg : within 6 months to get exemption) ??
    I know its long but I wanted to be explicit in my explanation of the situation so it becomes easy for u to understand and invite.
    If you could answer these questions it will be extremely helpful and advise on ways how STCG can be saved if at all , and if it cannot be saved how exactly it will be calculated (in details).

    Will look forward to your answer and thanks for considering.

    Sandeep

    • Hi Sandeep,

      a) You will be taxed as STCG . 53 – 51 lakhs, profit of 2 Lakhs.
      b) Please let me know , if Person Y is selling the flat now to you, which sale deed was done in 2007 ? with whom ?
      Most likely it seems that it wil be STCG for him as well.

      It may not be advisable to pay him 20% of the amount now and wait till Jan 2016.

      c) You can keep money in Saving as you cannot save tax on Short term capital gain.

      There are no ways to save short term capital gain apart form normal deductions from your income u/s 80C to 80U.

  50. sir,

    We have a plot and recently initiated the sale process. I expect a gross consideration of around Rs 27 Lakhs. some how it is getting delayed.

    Now I have finalized one residential flat for which I am availing loan for around Rs 35 Lakhs from Bank and Rs 25 Lakhs from relatives in anticipation of the sale of plot for Rs 27 Lakhs within a year

    Whether the sale proceeds of the plot to be sold can be utilized for repayment of loan availed from the relative exclsuively for the purchase of residential Flat u/s 54F. I do not have any other residential property and I will not sell new flat for next 10 years.

    Your guidance is solicited.

    • Ideally you should be able to claim the benefit as your money will be invested in residential flat within last 1 year or next 2 year.

  51. Dear Sir,

    I have purchased residential plot in 2002 @ 2 lacs and sold in Dec-14 @ 7 lacs , approx 75 k expenses for compound wall and land level charges in 12 years , please guide how much capital gain on this transaction , also to benefit of Long term capital gain tax If I purchase another residential plot not for investment is allowed , Pls. guide

    Thanks
    Deepak Jain

  52. 1 Acquired a property (a flat )at Rs. 9.50 lakhs in 2004-05,and spent approximately Rs 2.5 lakhs on it to make it livable.
    2. Sold at Rs 59 lakhs in 2014-15
    3. Has been in the process of acquiring another flat ,for which I paid Rs. 30 lakhs ,in stages over a period of 8 years(2005 to 2012-2013)Made the final payment of Rs. 7.5 lakhs and took possession in October 2014, after selling the flat referred in item 2 above.
    4. As newly acquired flat is a raw flat and is not habitable, I have spent about Rs. 8 lakhs.

    My querries are
    a. Am I entitled to include the cost of renovation /upgradation in the base price of flats purchased in 2004 and in 2014 to take exemption of capital gain tax ?
    b) Can I take utilize the payments made in the second flat ,prior to 2014-2015 for the sake of claiming exemptions from capital gain
    c) Though newly acquired flat is my name along with my son, all money has been arranged by me through loans etc (as he was not earning in the period , can I claim full exemption or will I get only 50% exemption ?

    thanks and regards

    • a) Yes you can claim the cost of improvement if it is enhancing property (not just furnishing the property)
      b) You can only take benefit of payment made within last 1 year of the selling of first property. So any payment made in 2013-2014 & after can be claimed.

      c) Ideally you shoul claim only 50%.

  53. Hi
    I have a query.

    I purchased an under construction property for 57 lacs, the letter of which was issued in Dec’13 and buyer – seller agreement was made in Feb’14.
    I took a home loan on same.

    If today (Mar or Apr 15) I want sell my house for 58 lacs, my query is can I include interest incurred on home loan while calculating my short term capital gain / loss And if yes, I would have paid appx. 3 lacs as interest.Can the capital loss so arrived at, be adjusted against my salary income?

    Rgds..

  54. Hi Vivek,

    I have booked flat in Jan 2011 and for which home loan 25 Lacs was sanctioned on 28 Jan 2011 and First Disbursement Date is on 26 Apr 2011. Including registration is costed me 38Lacs.

    Flat was registered on my name on Apr 07 2012 and we have taken posesion in August 2012.

    I wanted to resale the flat for 60Lacs.

    My query is that , When can I sell the flat to get the Long term capital gain and how much I need to invest in the property? Kindly let me know..

    Thanks,
    Raju

    • Hi Raju,

      The date of posession will be treated as date of acquisition for residential property. So you can sell the flat after Aug 2015 to claim Long term capital gain.
      You need to invest the capital gain amount in residential property or capital gain bonds.

  55. Nisith Ranjan Panda

    Hi, I bought a flat(Rs. 948000) on 18th Aug, 2011 and now, i buy a flat (Rs 2230800) and got poseesion 0n 18th march 2015 using home loan (Rs. 1835000). If I sell the first flat (Rs, 2300000) which i bought in 2011, how much capital gain i have to pay?

  56. Hi Vivek,

    First of all I want to thank you for the assistance you have provided to all of us here.

    I require your guidance on knowing about the Capital Gain in case I am to buy a new flat and sell the previously owned flat after this purchase.
    To clarify this I plan to buy the new under construction flat and do the registration/ agreement for it in 1 months’ time from now (i.e. May 2015). The possession of this property will be Dec 2016.
    I am yet to initiate the sale of the previously owned flat (owned by my mother) for which I had received the possession in May 2012.

    Q1. Can you please let me know the time which I have with me to sell the previously owned property to avoid tax resulting from CG?
    – Will it be 1 year after Dec 2016? Or will it be one year after registration / agreement which I will do next month i.e. May 2015.

    Q2. Can the amount obtained after selling the old flat used for repaying the loan on the new flat?

    Note: The old flat is owned by my mother and is currently under loan under her name. The current flat, I will apply for a joint loan with my mother and get it registered with her as a co-owner.

    Thanks in Advance.

    • Hi Gaurav, Please note that if the first flat is in your mother name, then she is liable for capital gain.

      Once you calculate the capital gain, you can claim tax benefit for any amount paid for propertry within last 1 year of sale and 3 years after sale. If you are not able to invest the full capital gain amount in that year, but will be paying to builder in subsequent years, then you need to deposit that amount in Capital gains account scheme.

  57. I HAD PURCHASED A PLOT DURING 1981-2000 AND SOLD THE SAME IN MAR 2014 FOR RS59LACS A SUM OF RS59000/WAS DEDUCTED AS TDS(1%) BY THE PURCHASER . A FLAT WAS BOOKED IN APRIL 2014 AND A SUM OF RS 74LACS WAS PAID AS95%OF THE COST.THE POSSESSION WILL BE GIVEN BY NOV 2015.I HAD ALSO BOOKED A FLAT IN 2010 AND POSSESSION OF THE SAME IS LIKELY TO BE GIVEN IN 2016.I AM ALSO HAVING A PROPERTY IN DELHI IN JOINT NAME WITH MY BROTHER FOR WHICH PARTITION DEED HAS NOT BEEN EXECUTED
    1 ENTITLED TO EXEMPTION UNDER SECTION 54(F) SINCE THE ENTIRE SALE PROCEEDS WERE INVESTED IN BOOKING FLAT
    2REFUND OF TDS DEDU CTED BY THE PURCHASER

    • Hi Vinod,

      For saving capital gain from sale of plot, you need to invest entire sale proceeds in a residential property.

      However, one of the condition is that – You should not own more than one house prior to the investment.

      Now in your situation:

      1) You have a joint property – which can be treated as 1 existing house
      2) flat booked in 2010 – may be treated as another property

      so as you have 2 properties prior to investment for flat in 2014, you may not be able to claim the capital gain exemption.

      However, some experts might argue that the flat booked in 2010 is not residential property (as it is not completed) and the amount paid is towards “Right to property” on possession. In such scenario, you may be able to claim capital gain exemption for flat booked in 2014.

  58. i purchased a site in jan 2008 at rs.4,00,000(regd value).i started comstriction in 2013 and finished in 2014 august.For construction i got permission from muncipalty for rs.13 Lakh.For bank loan i had given estimate for 25 Lakh. And incurred the same
    i i have sold the property for rs.48 Lakh
    please advise me what is my capital gain .whether it is long term or short term
    i wish to buy aproperty fo 40 Lakh(house).to get capital gain exemption how much should i pay out ofsale proceeds and how muchi can take loan. If i take 40 lakh as loan shall i get exemption

    • You need to calculate the indexed cost of acquisition for each expenses incurred based on the year when expenses was incurred.

      Rs 4 lakh – Index for 2007-2008
      cost of construction – index for 2013-14 etc

      As the property is completed in 2014, if you sell in 2015 it will be short term capital gain.
      Fort short term capital gain, you cannot claim exemption by investing in another property.

  59. Col Harbhajnik Singh (Retired)

    Dear Vivek,

    The article on method of saving long term capital gains tax and the live question answers are very educative for people like us. However, i have a peculiar case detailed below for your advise.

    1. i registered and booked a flat in Mumbai with Army Welfare Housing Organisation (AWHO) in 1986-87 with a booking amount of 12,434. My registration was confirmed and I was allotted a flat in Navi Mumbai instead of Mumbai in 1988. However, due to some flats falling vacant in AWHO property from a previous project in Oshiwara, Andheri West, Mumbai, I was informed that I have been upgraded for allotment of flat in Oshiwara 1991. A fresh allotment letter stating that my allotment has been upgraded was issued to me on 4 Apr 1991. After full payment i took possession of the Flat in Nov 1991. However, the army approved the registration of flat in individual name in 2002. accordingly I registered the flat in joint name of myself and my wife. In the given circumstance please advise that for calculating the CII, what would be counted as the date & year for purchase of this flat?

    2. I paid Rs 711845 to AWHO as the price for purchase of flat. I paid Rs 7580 as stamp duty, 1000 as registration fee and 2100 as advocate fees for registration of Deed of transfer with MHADA. Please advise which of these costs would be eligible for addition to price paid for acquisition of flat for calculating CII.

    3. I have sold the said property in 2015. As the buyer was taking a loan for purchase of this flat and I had also to take NOC from AWHO, the deed of conditional sale/transfer was registered with MHADA on 09 Mar 2015. Condition being that the final possession of the flat will be given only after receipt of full payment. The flat was finally handed over to the purchaser after full payment on 13 Apr 2015. Please advise as to what will be the reckonable date of sale of flat for the purpose of working out the CII. Also what will be the reckonable FY of sale of property for notifying the sale in ITR and for opening Capital Gain Account, if required.

    4. The Flat was sold for a consideration of 2.42 Cr. I had to incur expenses for obtaining NOC from Society, AWHO and MHADA by paying 25000, 10000 and 26250 respectively. In addition I have paid TDS of 242000 against the sale of this flat. As per rules the buyer paid TDS on my behalf by deducting it from the sale proceeds on 04 Apr 2015. Please advise as to which of the above expenses are deductible as expenses from the sale price.

    5. i would be obliged if in addition to advise on above queries if you could kindly advise me on the the capital gains I would invite in the above transaction.

    Regards

    Harbhajnik

  60. Dear Sir,
    i booked a Flat in a underconstruction building, a flat was alloted to me and sale deed was registered with government on 27/mar/2012, while it was still undercontruction.
    But the date on completion certificate & possesssion certificate given to me is dated 17/mar/2013.
    so to get benefit of long term capital gains on the sale of this property which date should i consider?

    Awaiting your valuable reply

    • Now once the property is ready, the possession date will be date of acquisition of house property – 17-Mar-2013

  61. Col Harbhajnik Singh (Retired)

    Dear Vivek,

    1. I had posted my query regarding working of capital Gains on an Army Welfare Housing Organisation (AWHO) flat in Mumbai that was under moderation for most of the day today but unfortunately it has since been taken off the your post.

    2. I registered with AWHO for a Flat in Mumbai by paying booking amount in 1987. Due to Non Availability of Flat in Mumbai, I was allotted a house in Navi Mumbai in 1988. In Apr 1991, I was issued an allotment letter for a Flat in Oshiwara Andheri West, Mumbai, stating that due to some additional becoming available in the Oshiwara scheme my allotment is upgraded for allotting a flat in Oshiwara., Mumbai. I took possession of this flat from AWHO in Nov 1994. We got permission from AWHO to register these flats in our name in 2002. Accordingly the flat was registered by me in Sep 2002.

    3. I paid AWHO Rs 7,11,845 to AWHO as the cost of Flat. At the time of registering the flat I had paid stamp duty of 7580, registration fee of 1000, and a nominal amount for obtaining NOC from MHADA.

    4. In the given circumstances please advise as to which year would be taken as the reckonable year for purchasing the Flat for calculating the CII and which of the expenses listed in Para 3 above can be added to the cost of Flat for working out the Capital Gains.

    5. I sold this Flat in 2015 for 2.42 Cr. As multiple agencies were involved in facilitating the sale of Flat, I paid a sum of Rs
    10000 to AWHO, 26250 TO MHADA, 12500 to the Society for obtaining NOC and 2.42 Lac as brokerage fee. The buyer also deducted 2.42 Lac as TDS. Please advise which of these expenses can be deducted from the sale price to work out the CII.

    6. I received token money of 24.2 Lac for sale of Flat in Feb 2015. Since the purchaser had to take a bank loan we registered the Flat on 09 Mar 2015 after receiving an additional part payment of 88 Lac. The registration was to be effective on receipt of full payment. The Final payment of 1.30 cr was received from Bank on 13 Apr 2015. Please advise as to what will be the reckonable year for working out the CII and in which Financial Year I am obliged to reflect the sale of flat in my ITR.

    Thanks

    Harbhajnik

    • I think in your case, you should talk the possession year (1994) for CII.
      All the sale expenses apart from TDS can be reduced from the sale price.

      As the final sale was effective only in April 2015, you can take 2015-2016 as sale year . for which you need to file return in July 2016 only.

  62. Hi Vivek ji,

    I purchased a plot in HUDA in 2008 as transfer case.
    payment made while purchase…5lacs……(A)

    Made the full payment and got the conveyance deed done in 2009 (by taking possession).
    Payment made on possession…..172800…..(B)

    further i paid some more dues like extension fees and interests for non construction in FY 2012-13.
    payment made…315,670….(C)

    Now i started the construction of this house in FY 13-14 & FY 14-15 & I intend to sell this house now as a builder floors.

    payment made for construction and all other things 12lacs and 36lacs resp for the above 2 FY….(D)

    Total sale price expected…150 lacs ……(E)

    Now following are my queries

    1. can i avail LTCG
    2. Can it be availed without indexation also
    3. If i can avail LTCG, then how ?

    As all the fig are mentioned above, can you kindly let me know on what amount do i need to pay tax and how much.

    Best Regards,
    Ashish

    • Hi Ashish, it is better to take advice from local CA.

      From my understanding, as the flat were ready only in 2014-2015, and if you are selling now, then it is Short term capital gain.

      therefore no indexation allowed. You will need to pay the tax on the profilt which will be added to your income.

  63. Hi Vivek,

    Thank you for your valuable input on capital gains tax exemption. I have two apartments. For apartment 1, I am the first owner and my wife is the joint owner and for apartment 2, my wife is the first owner and I am the joint owner. We do not own any other property. Registration and possession (OC) of the apartment 1 was completed more than 3 years back. I am planning to sell apartment 1 to buy an under construction propeerty. Am I eligible for capital gains tax exemption? If I am eligible, can I invest the gains within 2 years in an under construction property from a builder which will be completed (OC – possession) only after 4 years? Should I not have more than one property to avail the capital gains tax exemption? Your valuable feedback is greatly appreciated. Thank you.

    • 1) You can sell the apartment 1 and use the capital gain amount to invest / build property. So you can buy under-construction property.
      Please note that you will get exemption only if the payment is made by you and not via bank loan. You need to keep the amount in Capital gains scheme and pay the money to builder in required installments.

      In many cases, the exemptions is allowed even if the builder has taken more than 3 years.

  64. Sir, for capital gain will sale deep value is considered or sale agreement ?
    In my case the buyer wants to keep sale deed price at low to avoid some tax and keep the sale agreement value high for loan purposes. When I get the money it will be from bank which will match the sale agreement value .

  65. Dear Vivek,
    Me and my wife together (both NRIs) booked a flat on 31 Dec 2010 of value 60 lakhs. Its a under construction property.
    Sale Agreement was done in Sep 2011 and the final Sale deed registration was done after the completion of flat in Dec 2013 during possesion.
    Later we(me and my wife) sold the flat on 07-May-2015 for 80 lakhs.

    1) In this case which date will be considered as allotment date or acquisition date of the flat, the Booking date or the agreement date or the registration date?

    2) Gain will be STCG or LTCG?

    3) Capital Gain will be split between us and accordingly we need to pay tax separately?

    4) Now how much tax we both need to pay assuming there is no other income for us in India?

    Please let me know on this soon. Thanks a lot in Advance.

    regards,
    Subhra

    • Ideally the buyer should have deducted TDS from the sale amount.Did the buyer not deducted TDS ?

      1) Once you have received the possession of flat, then the countdown for long term starts from that date.

      2) Gain will be STCG, as the flat is sold within 3 years of Dec 2013.
      3) Yes, Capital gain will be split.
      4) NRIs cannot adjust the taxable capital gains against the basic exemption limit. So, if you have earned Rs 10 lakh as STCG, the full amount is taxed at the applicable rate. You cannot adjust this income against the basic exemption limit of Rs 2.5 lakh.

      On Rs 10 Lakh, the Tax will be Rs 1.25 lakh (for NRI)

      http://wealth18.com/income-tax-rates-tax-slab-for-fy-2015-2016-ay-2016-2017/

      • Dear Vivek,
        Thanks a lot for your response. Yes the buyer has paid TDS for both of us separately.

        My doubt on point (4), Can we invest 1.5 lacs each in NRO 5yr Bank FD to get 1.5 lacs exemption on STCG?

        Thanks,
        Subhra

        • yes you can invest in NRO Tax Saver FD and claim deduction upto Rs 1.5 lakhs u/s 80C. However, you will need to pay tax on balance Rs 8.5 lakhs each.

  66. My father a retired senior citizen who is 80 years old possesses a flat which he had constructed for about 5 lakhs 20 years back. Today, he is expected to get approx 1 crore for the same property. If he wants to save the capital gains on this amount of 95 lakhs, can he buy jointly with both his sons investing 40 lakhs each in both properties and invest balance 20 lakhs in Govt bonds which gives monthly return/ quarterly return so that he can live comfortably. Is this possible or will he not be allowed exemption in two properties?

    • HiNaveen,

      it is possible in invest in total 2 properties to claim capital gain exemption. Also, he can invest in Govt Bonds for the balance.

      For calculating capital gain, you need to calculate the indexed cost of acquisition, that will reduce your capital gain amount & it will be less than 95 lakhs.

  67. I purchased flat A in dec 2004 and sold it in june 2012. I purchased another under construction flat B in July 2012 and got allotment letter for the same from builder in July 2012. I invested capital gain from sale of flat A within Mar 2013 by paying installment builder for flat B. Flat B construction is still in progress and possession and registration is expected to be in Dec 2015. Since the registration of flat B will happen post 3 Years of sale of flat A, will the exemption of capital gain invested in flat B become void? Or since I invested in flat B and have allotment letter my claim of tax exemption from capital gain will remain valid?

    • Hi Vivek,
      Any thoughts on this query?

    • Hi Aditya,

      At the time of filing returns for FY 2012-2013 , how much amount did you paid to the builder and how much did you claim as capital gain exemption. Also how much was the capital gain from old property.

      In addition, how much did you paid to the builder in 2013-2014 & 2014-2015. Whether you deposited this amount in Capital Gains Scheme account in 2012?

      Normally if there is delay by builder and substantial amount is paid within 3 years, the exemption is still allowed(as per some court case decisions).

  68. Prabhu S. Angadi

    Sir,
    I have query regarding capital gains by property sale.
    I booked a flat under construction in Aug 2012. I was allotted flat no and registration for the flat was done in Dec2012. The flat was completed in Jan 2015 and I have taken possession on 23 Jan 2015.
    I am presently residing in my old flat purchased in 2005. I am looking to sell this flat since I have lost my job recently and cannot pay EMIs of new flat loan.
    If I sell my old flat now, to get capital gain exemption, can I show my new flat as investment.
    My major query is which date is considered as purchase of new flat? Is it date of registration or date of possession?
    In my case if date of possession is considered as date of purchase, then I can avail of exemption based on the rule that I have purchased new flat in one year before sale of old flat.
    Please help.

    • 1) If you sell your old flat, you can show the new flat investment to claim capital gain exemption. But remember, you can only take that amount which you have invested in new property (not the home loan amount)

      2) It will be considered as date of possession and you can claim on the basis of 1 year rule.

  69. respected sir,i had purchased a commercial property in 2006 for 9 lakhs and sold it for 60 lakhs in 2014-how do i calculate the capital gain tax for the same,i have also purchased another commercial property with the same money which is worth 49lakhs in the same year 2014,i had also done renovations in my commercial property of about 15lakhs before selling,also are the stamp duty ,registration charges and broker comission applicable?
    please answer at the earliest,thanks

  70. abhishek nadhani

    i had sold my commercial land and on that sum of money i have purchased agricultural land. can you please help me to know what type of benfit i can get on taxation

    • Hi Abhishek, You can not claim any capital gains tax benefit as it is available if the residential house is purchased or constructed.

  71. hii i have problem please suggest me my more than one residential property and commercial property i had interested to sale in current financial year out one residential property and one commercial property. commercial property treated as other than residential property u/s 54F and also i am not invested in another residential property becouse my hand more than also residential proprty? and can invest the same 54EC? and under section 54 If long term capital gain sale of residential property can i invest more than one residential property? please suggest best me sir

    • Hi Manpreet, Please explain your query.

      If you are selling commercial property, you need to invest ENTIRE SALE Proceeds in Capital gain Bonds (upto Rs 50 lakhs).

  72. Hello,

    I have a very specific question to which I haven’t find any clear answer till now. I am selling a JDA (Jaipur development authority) approved residential plot, no construction only vacant plot. Now from the capital gains can i buy another residential plot (not house and neither i plan to build a house on the same within 3 years) and avoid paying CGT.

    • No, For claiming the deduction, the new investment should be in pourchase / construction of residential house. Else you can buy capital gain bonds.
      It will not be allowed just for buying a plot.

  73. Dear Sir,

    My Father using his own funds purchased a commercial property in 2005. Sale deed was executed jointly and I was made 50% partner in the purchased property. Now My father wants to sell this property. My query is will the Long Term Capital Gain be taxable in my father’s hand solely or will it be taxable separately?

  74. Hi Vivek
    I’ve purchased a resale flat in April 2014 for 32 lakhs, if I sell this flat in 2015 for the for the same price (32 lakhs) what are the tax implications.
    Thanks.
    Gita

  75. Hello Sir,

    my father,aged 63years wants to sell his workshop land. He purchased 10-15 years back for 1lakh.
    Now it costs around 40 lakhs.

    1) how much amount his have to pay as capital gain tax?
    2) Is there any way to save capital gain tax ?
    3) if it is invested in capital gain tax bonds , how much amount should be invested?
    4) I understood that capital gain tax bonds are locking period of 3 years, after 3 years do we need to pay tax for 40 lakhs as source of income?
    5) Incase if I get any share out of 40lakh, Do I need pay tax as source of income ( I am salaried person)? or is it gift ?

    Thanks
    Baaji

    • Hi,

      1) You need to first calculate the indexed cost which will depend on the year of acquisition. See the cost iflation index rates
      http://wealth18.com/cost-inflation-index-chart-table-1981-to-2014-for-income-tax-capital-gain-purpose/

      Assuming it is bought in 2000, then indexed cost will be approx 4 lakhs (it willchange depend on the exact year of purchase)

      1. So your capital gain will be approx 36 lakhs.

      2. TO save capital gain tax, you need to invest entire 36 lakhs in new residential property or capital gain bonds.
      4. After 3 years, when the capital gain bonds mature, no tax need to be paid
      5. To save capital gain tax, entire 36 lakhs of gain need to be invested. So there may not be any money left to give you as gift. Assumung you get some amount from this sale, you can treat it as gift and there will not be any tax liability on you.

  76. Shubha Brata Roy

    Hi Vivek,

    I was reading through all the posts above and I must say I am really impressed with your patience and dedication towards responding back to each and every query that was sent to you. Thanks a lot for your efforts!

    I have a specific query related to joint ownership of property and its effect on the capital gains tax liability. My parents bought a residential property jointly for INR 5 Lakhs back in April 2005, which they sold for INR 26 Lakhs in May 2015. They have an approximate capital gain profit of around INR 15 Lakhs.

    Now me and my younger brother are planning to buy two residential properties each worth INR 63 Lakhs and want to keep our parents (both of them) as joint owners. We are planning to join the properties internally to function as one single house. The payment for the entire amount and ownership is planned as below:

    Property A – Owner 1: My father, Owner 2: My mother, Owner 3: My brother. Down payment is made by INR 13 Lakhs from the half of the sale proceed from the old property and rest INR 50 Lakhs through housing loan taken jointly by all three of them, and loan payback to be done by my brother.

    Property B – Owner 1: My father, Owner 2: My mother, Owner 3: Myself. Down payment is made by INR 13 Lakhs from the half of the sale proceed from the old property and rest INR 50 Lakhs through housing loan taken jointly by all three of us, and loan payback to be done by me.

    Now my queries are:

    1. I have been reading from multiple sources that LTCG tax for a property sold jointly can be exempted only if the next property is bought jointly. Is this correct? Do my parents have to buy the property jointly to save on the capital gains tax? Can they not save if they invest half share independently in separate properties?

    2. I have also read somewhere that LTCG tax can be exempted only if the owner(s) invest the entire sum in only a single property purchase. But as per our plan mentioned above, they will be the owners of two different properties and they would have jointly invested the entire sales proceed in two different properties. Does this entitle them for a LTCG tax exemption for the entire amount since the entire amount is actually invested?

    3. Last question, I am investing this amount in July 2015. So since the entire sale as well as the next property purchase happens in the same FY, within a gap of 2 months, do I need to file the LTCG profits in the IT Returns for the next assessment year? I have not parked the amount in any LTCG Savings account yet.

    Please advise.

    Thanks!
    Shubho

    • 1. Thats not correct. TYhey can invest independently. There is no requirement to buy jointly.

      2. As the capital gain is from sale of residential property, to claim deduction, you just need to invest the capital gain amount (and not the entire sale amount)
      Note that at the time of claiming exemption, they should not have more than 1 property in their name i.e. total 2 properties can be in their name.
      They can invest in 2 properties.

      3. As the sale was done in May 2015, it needs to be shown under FY 2015-2016 (AY 2016-2017) Income tax return. You need to show both the income & then claim deduction.

      • Shubha Brata Roy

        Thanks a lot for your response Vivek sir!

        I am little confused with this statement in Point #2- “at the time of claiming exemption, they should not have more than 1 property in their name i.e. total 2 properties can be in their name”

        Can they both be joint owners in both the properties and still claim the exemption? I mean the way we are planning to distribute the ownership among Property A and Property B, does that work with Capital Gains exemption for the entire amount for both my parents?

  77. I live in a house. I also have a plot which I would like to sell and would like to save on the long term capital gains by buying two apartments for my children. Can I do that and save on th LTCG tax. Please advise.
    Thanks!

    • Hi Sonia,

      If you already have 1 house in your name, you can invest in 1 more residential house to claim capital gain exemption.

      For capital gain on sale of plot,. you need to invest the total Sale amount to claim exemption.

  78. I have bought residential property “A” in 2006-2007 for 25 lacs. I bought another residential property “B” in 2012-2013. Now i want to sell property “A” in 2015-2016 for 180 lacs & buy another property with the capital gains which comes around to 130 lacs after indexation. So can i get exempt from capital gains tax if i buy another residential property against this amount? I am asking because i have property “B” as well.

    Thanks in advance

    Regards

    Parag

    • Hi parag, yes you can claim capital gain benefit ( only you will have only 1 property in your name at the time of making new investment).
      So in total you can have 2 properties.

  79. Hi Vivek,

    I have one flat jointly with my wife booked in 2010 having allotment date in June 2010. Possession of flat is received in May 2014 but registry is still not done by builder. Now I want to sell this flat and want to buy a bigger flat using entire sale proceed.
    In Dec 2012, I purchased a plot along with my brothers and construction is currently going on this plot.

    My questions are :
    1. What will be capital gain tax ..short term or long term? As I read Chandigarh high court verdict in some case that allotment date should be taken into consideration to calculate capital gain tax.
    2. If it is long term gain tax then due to under construction house , will i get exemption of investing entire sale proceed into new house purchase?

    Thanks
    Yashwant

    • 1. The allotment date is considered as date of acquisition only of you are selling before taking possession ( as the capital asset is right to acquire)

      But when you take the possession, then your capital asset is “House” and the acquisition date should be date of possession…

      In that case, if you sale the flat now in 2015, it will be short term capital gain.

      2) If it is short term capital gain, you cannot save these taxes by investing in other property

  80. I am selling a commercial property situated in mumbai. I got the office from my landlord in the year 2010. Whole commercial building was transferred by landlord to each individual occupying the office area on rent. How will i be charged on capital gains on selling this propoerty and how do i save myself from capital gains arrived after indexation benefits.

    • 1) How much amount landlord is charging for transferring property under your name? What is purchase value of you.

      You will need to calculate the capital gain based on the selling price & purchase price (based on indexation as per purchase and sale year)

      2) You need to invest the entire sale proceeds in residential property or invest the capital gain in capital gain bonds.

  81. Sir I am a govt. employee and I have sold a residential house which was on my wife’s name for Rs 1500000 on Aug.2015 and wish to start construction for new house on a plot which is registered in my name. The said plot is of agricultural land and is not yet converted to residential land. My wife is dependent on me, i.e. she is a housewife.
    Now my query is that am I eligible for tax rebate .

    • If the sold property was in wife name, then the new property should also have wife’s name to claim any tax benefits.

  82. Hi,
    I have purchased a property for 7.5 Lakhs during 2001 and plan to sell at 43 Lakhs by Oct 2015.
    I have found a new property valuable of 42 lakhs for reinvestment and the expected possession is Dec 2016.
    I request your clarifications on the below points.
    1. Can i do the transaction of receiving the cheque and transfering to the money to new Builder through by my Savings Bank account?
    2. I wish to register the new property on My Wife’s Name, what should I take care to do so?

    Thanks in advance

  83. Shivani Pimprikar

    Dear sir,
    Sir I have purchased an underconstruction flat and I have made full payment in January 2014. I will receive the possession in September 2015. Meanwhile I have sold another flat of mine in July 2015. Can I claim exemption under section 54 on the basis of possession, considering investment is made before 2 years after the date of sale in the flat whose payment I have made in January 2014?

    • Hi Shivani, You can only take tax benefits if the investment in property was done in last 1 year. As you have made the investment in Jan 2014, you will not be able to claim benefit.

  84. What about Cap Gain on Residential Land.
    Allotment from Govt Authority 2002
    Original Installment Ended 2008
    Possesion 2006
    Enahncements awarded to land owner farmers by Courts = Intalments Paid from 2012 to 2015
    Conveyance Deed from Govt Authority / Registry Date FY2015-16
    Sale FY2015-16

    LTCG or STCG ?

  85. Dear Sir,

    I had sold of under construction property – flat last year. On 24 June , the buyer had deposited money in my account. I have bought REC tax saving bond and the receipt is dated 23rd December, how ever the cheque got en-cashed on 26 Dec. Would the 6 month duration within which the bonds have to be purchased be counted based on the receipt date or the date my cheque was encashed. Am i eligible for tax savings.

    Please advise.

    Thanks and regards
    A

    • Hi Anuj,
      Yes you can claim tax benefit. As long as you have invested money in that financial year or in some cases before filing the tax return, the deduction is allowed.

  86. 1) Husband sells residential plot (eligible for LTCG).
    2) Wife sells residnetial flat (eligible for LTCG).
    Both pool the money from the sale & buy ONE residential flat (or residential plot & construct it within 2 years).
    Registry done in the name of Husband & Wife in proportion to the funds contributed.
    Are both eligible for LTCG exemption w.r.t sale done in point 1 & 2 above ?

  87. Dear Vivek,

    Many many congratulations to you on maintaining such a good website and a good repository of questions which will be very helpful for a lot of people..

    Even I was facing a problem regarding something similar.. I have gone through almost all of your questions but could not find a clear answer to my problem.. It will be really helpful for me if you could let me know the best way out.. I have detailed my problem below.

    I have the following two properties

    1) A vacant plot.. Total Sale Consideration : 8.5 lakhs.. Long term Capital Gain: 7 lakhs

    2) A built house.. Total Sale Consideration: 55 lakhs.. Long Term Capital Gain: 30 lakhs..

    Total Capital Gain from both properties comes out to be : Rs 37 lakhs

    3) I want to sell both the above properties and buy one residential flat for myself.

    My specific queries are:

    1) Am I allowed to use the combined LTCG of both the properties to buy a single residential property which I plan to buy a ,say in another 1-2 years ????

    2) Is there any clarity/rule which says that ONE SINGLE PERSON can claim benefit under Section 54/54F only for SALE OF ONE SINGLE PROPERTY or does it apply to SALE OF EVEN MULTIPLE PROPERTIES ??

    3) Are there different sections for claiming benefits of LTCG for vacant plot (54F) and a fully constructed house (54) ??

    4) If both my properties are getting sold in two different months, do I have to deposit the separate LTCG in 2 separate Capital Gains account or can I deposit it in one account which I can open before the next Income tax return filing date, i.e 31st July 2016 ?

    Looking forward to your reply as I am really confused and I was not able to get a satisfactory answer to my above questions from anyone or even on the internet..

    Thanks and Regards —

    Saurav

    • Hi Saurav,

      1) Yes you can buy 1 property and claim capital gains benefot from saleof 2 properties. You need to keep this money in Capital gains Account scheme till you buy new property.

      2) There is no such rule
      3) For sale of plot, you need to invest ENTIRE proceeds to get capital gains benefit.
      For sale of house , you need to invest ONLY PROFIT to get capital gains benefit.
      4) You can deposit it into 1 capital gains scheme.

  88. Sir
    I purchased a plot in July 2002 in 400000 & sold in year 2012 April in 4500000 , I have been forcibly given VRS by my employer in 2004 , but I have not taken & fighting case along with other employee , from then onwards I have been look after by my sons & my expenses are met by the sons only , the money I got after selling of plot is given to them to purchase a plot , sir I want to know that my expenses being met by my sons couldn’t I give money to my sons . Is that money be charged under long term capital gain tax , my sons before that don’t have any property , please advice me

    • Hi Sunil,

      As the property is owned by you, any profits / capital gains will be your liability. YOu will have to pay capital gains tax on that.

      To save the capital gaisn tax, you can invest in other residential property or invest profit in Capital Gains Bonds. For giving money to son, you cannot take tax benefit.

  89. Sir
    While paying tax is it not being considered that I am jobless for last 11 years , fighting case in high court ,Supreme Court for the job & my family & younger children of my family is being look after by my two elder sons with limited income,
    Thanks
    I need your urgent help

  90. Hi

    I got sale deed registered for my flat in Oct 2007 for 23.68 lac and sold this property in May 2015 for 40 lac. So indexed capital gain calculated comes in negative(loss). So is it right that I do not have to pay any tax.

    pl let me know.

  91. Sir,
    Please advise me.
    I have purchased a flat before selling my existing flat.
    A potential buyer for my existing flat promised to take it. Based on his promise, I decided to buy a new flat; (paid 25 lakhs out of total cost of 29 lakhs) and registered a new flat which is not yet ready for occupation.

    Now I am trying to sell my existing flat.The selling price will be around 20 lakhs. This flat may not attract capital gain.If I can not sell it within one year, what will be my tax liability when it is sold afterwards ?

    • If you cannot sell this flat within 1 year, then you cannot take capital gain benefit for this property purchase.

      On sale of that property, you need to calculate the capital gains tax. For get benefit, you need to invest the profits in another property or capital gains bonds.

  92. I have two flats in Mumbai one bougt in the year 2000 in my name and other one in 2004 jointly with me and wife taking a bank loan. Now I am intending to sell the flat bought in 2000 and would like to buy another residential flat jointly (self and wife) which may take 3-4 years to complete. I would like to know the following..

    i) Is this possible to repay the existing loan against flat purchased in 2004, and spent the balance for the new resiential flat

    Regards
    Dineshan

    • Hi Dineshan,

      You will not get capital gains benefit by repaying the loan taken for property bought in 2004.

      You can only claim for the amount invested in new property.

  93. Dear Vivek ji,

    I buy a flat in 2010 and cost was 24 lacs
    it was construction linked plan.
    I got the possession in june 2015 and registration in July 2015.
    now I want to sell this house . how will be the tax calculation.
    it comes LTPGT and what will the tax on my selling price.
    Selling cost is 45 lacs.
    Regards:
    Yogendra

    • Hi Yogendra, It will become short term capital gain.

      As you got the registration in July 2015, you have got new capital asset and if you sell before 3 years, it will be STCG.

  94. Dear jain sir I want know from you about LTcg. We have sold a joint(7shareholders) agriculture land in Rs 107400000 to a developer . there was an unregistered sale agreement done in Dec 13 & whole amount is recieved by us in July end this year and we have given the possession to builder & he started developing the land but registry is not done .sir please tell us how we should proceed to invest so that we can save maximum tax &

  95. Dear Mr. Vivek,
    I had bought an industrial Gala in the year 1979 for Rs. 46,170 in a registered society and have spend Rs.2,05,596 towards major repairs in the society year on year.
    Now i want to sell the gala will i get capital benifit on the amount paid by me towards major repairs and how do i calculate the capital gain as the major repairs amount is paid every almost every year.

  96. I gained 40 Lac from selling ancestor property on April 2013. I am looking to buy an apartment now.. can I buy a new apartment which is in the final stage of completion as I have crossed 2 year period ? if no what other options I have other than building a residential home using a promoter?

    • Hi,

      1) Have you deposited the money in Capital Gains Accounts? If not, then you cannot claim capital gains benefit for buying or constructing the flat.

      You can buy an underconstruction property within 3 years.

  97. Hi Vivek,
    I have a plot of land (purchased 7 years back) and a residential house and a commercial property. Now I want to sell the commercial property.
    To save the capital gain, can I construct a new house on the existing plot of land or do I have to construct house on an entirely new plot of land?
    Can capital gains be exempted if there is an extension in existing residential house, like building another floor?
    Thanks

  98. I had a flat which I bought in june 2005 for INR 17L. I have sold this flat in sep 2015 for INR 86L. My capital gain is INR 48L. My query is –
    a) by when at latest do I have to deposit the capital gain of INR 48L in the CGAS.
    b) can I keep the diff of sale amount and capital gain i.e. INR 38L in my regular savings account?
    c) If I intend to buy another flat. by when at latest should I close the deal for the new flat?
    d) the buyer has deducted INR 86T as TDS. Can I claim refund in return to be filed in june 2016 for AY 2016-17.
    e) Am I correct in my understanding that if I do not intend to buy a flat now, I deposit the capital gain amount of INR 48L in bonds and I will not require to pay any capital gains tax going forward?
    f) if after 5-6 yrs I decide to buy a flat do I get any benefit?

    • Hi Anju

      a) you can deposit the amount in capital gains scheme within 6 months (before filing tax return for that year)
      b) Yes the amount in excess of capital gain can be kept as you wish.
      c)new flat should be bought within 2 years of sale or construct within 3 years of sale
      d) Yes you can claim that TDS amount while filing returns
      e) Yes, you can just deposit the capital gains amount in Capital gains bonds and no tax is payable afterwards
      f) There is no benefit needed even if you invest in new property after 5-6 years.

  99. I constructed a house by using the sale proceedings (49 lacs) from another House property held in my name for more than 3 years and got capital gain exemption ( 39 lacs after considering the original cost) in the year 2014-15 return.

    Now I would like to sell the new house (45 lacs) and invest in purchase of new house (45 lacs with doumentation) and will be spending around 5 lacs for interiors.in 2015-16

    Please advise the short term capital gain tax I need to pay

    Thanks

    • Hi Padma,

      If the new house is sold within three years, the earlier deduction claimed will become taxable as a long-term gain.

      So you will have to pay tax on previous Long term capitla gain and this property’s short term capital gain.

  100. namaste sir, my wife bought a shop jointly in 1979, she sold it in oct. 2015. she purchased a flat, booked in 2011 and got possesion in 2014 march the last payment was made in march 2014. sale deed has not been registered as yet. pl. guide me can she save ltg by paying loan. thnx. in advance. regds.

  101. Mr Jain,

    I have purchased a flat in 2014 and expected to get possession in dec 2015. I am planning to sell the flat on possession for bigger area flat. what will be the tax implication and what are the options to save on tax. tks

    • If you sell the flat that you received in Dec 2015, then it will be treated as Short term capital gain. There is no way to save capital gains tax on that.

  102. Hi All,
    I want to understand the tax implication in below circumstances
    a) Bought a flat in 2009 for 20 Lakhs. Possession Given in 2011 Feb.
    b) Bought a second flat for 1 cr. Registertaion done home loan availed.
    Planning to sell the old flat at 35 lakhs and use the profit earned post indexation for repaying home loan for the new house.
    Can I clain LTCG Deduction for same?

    Thanks,
    Anaya

  103. i have purchased flat in year 2007 7,23000 and i am selling at 23,75000 in 2015 and i have taken 10,00,000 loan as morgattge and i am forclosing in a year what property gain will be for me.

  104. Dear Sir , Can you pls confirm whether the profit amt after selling the house is to be invested in another property ( both residential flats ) within one year or two years from the date of registration , which govt tax website tells us the latest facts . thank you in adv

    • Hi, yes profits needs to be invested in another residential property within 2 years (in case of purchase ) and within 3 yers(incase of construction)

  105. hello Vivek Sir,
    first of all thank you for answering the queries of so many people.
    Sir, Me and my brother owns a residential building gifted by our Father in 2015 ,though it was built in 2005. we are selling this property at 60 lakhs and the capital gain will be almost 45 lakhs. so , as of the property is in Joint Ownership , will the capital gain be taxable. The building is commercial ( ground floor ) and residential ( first floor )

    • Hi Anish, If there is two separate property, you should calculate the gains separately. You can then make eligible investments to claim the benefit.

  106. Hi Vivek,

    If i want to sell a flat which is in my name and my mothers name which was purchased in 1999, and i am also holding individually more then 1 flat in my name will i be able to get the tax benefit or can i use the entire sale amount to buy another property. Do i still have to pay tax.
    Please advice.

    Regards
    Romy

    • Hi Romy,

      As you have more than 1 property, you will not be able to claim benefit by investing in another property. But you cna invest the Profit in the Capital Gains Bonds and claim benefit.

  107. I booked a flat in Allahabad and on the basis of agreement to sell, paid the entire amount to the builder. The registry is not done till date and now I want to sell it to another person. I had also taken a bank loan for it. how the new sale will be finalized.

  108. Thanks for very educating info. I have a query, A property in the name of my wife if sold can the sale proceeds be invested in a new residential property in joint names of myself and my wife to claim exemption ? Please clarify. Thanks

  109. Dear Sir,
    I have placed a query on Novemer 26th. But I did not get your reply . I am repeating my query. I have two residential houses and one vacant site. I have gifted one of my residential house to my blood brother by way of gift deed during the financial year 2014-15. Now I am planning to sell my vacant site during the current financial year 2015-16 and intend to reinvest the entire sale proceeds to buy a new residential house. By doing so, Can I claim the exemption of Long term Capital Gain?

    PLEASE REPLY.
    THANKS

    • Hi Sriram, When you say vacant site – is it plot ?

      You can claim the capital gains benefit by investing the entire amount in another residential property provided you donot have more than 1 existing property.

  110. I had purchased new flat in Dec 2010, got possession letter in March 2011, then sold my old flat in May 2012, then I paid the amount of capital gain [22 L] to new house home loan account [21 L] in June 2013. Can I get exception of capital gain in the income tax of assessment year 2013-14.

  111. Dear sir ,
    i had purchased a flat in pune in Aug. 2003 at 5 lakhs
    Now I wish to sale it at 28 lakhs , in next month.
    what will be the capital gain calculation /
    And can I keep the profit earned in my bank account for next mini. 1 year in the form of FD ?
    or is there any other specific provision is available ?
    After 1 year i will be investing it again in the property .

    Pl. suggest the logical way .

  112. Hi,

    I had booked property under construction in FY 2005~2006 in Mumbai. Substantial payments including Registration fee, Stamp duty were made in FY 2005~06. Subsequent payments were made in FY 2006~07, FY 2007~2008 AND FY 2008~09. Posession was received in July 2009. Now I am in final stages of negotiations to sell the flat. My query is that while determining the total indexed cost can I compute the indexed cost of the payments made in FY 2005~06 and then to that add indexed cost of the payments made in FY2006~07,FY2007~08, FY2008~09.

    Regards

    Sunil

    Regards

    Sunil

    • Hi Sunil,

      Yes you can do that. You can calculate the indexation based on the year of payments.

      • dera vivek.

        thanks for your prompt response

        Regards

        Sunil

      • I had purchased a Flat in 1978 at Bombay for Rs. 68,000 and sold it for 90 lakhs on 1st October 2015.
        I want to purchase a Flat in Bangalore for Rs 80 lakhs + Registration.what are the Tax benifits to me Loss or Gain?

        • Hi Srinath,

          You need to calculate the capital gains tax n the mumbai flat. You can claim the capital gains benefit by investing in new property in Bangalore in joint name.

  113. Hello Vivek,
    1. My mother sold a house in Nov 2014. This was constructed before 1981. We have calculated the CG using indexation from 1981. The capital gain is x.
    2. We (my mother, sister and me) sold another plot in Feb 2015. The capital gain was Y. We split it into Y/3 and invested it in bonds. Is that ok if I already own another flat and my mother will buy another flat from capital gain X from point 1?
    3. Also, to invest capital gain amount of X, by when do we need to buy another property? Do we have to buy it before Nov 2016 (2 years)? What about possession date if buy a under construction property? Does this property need to become ready by Nov 2017 (3 years) or there is no such restriction? Do we have to invest this entire capital gain X in property or can it be split into property and bonds? Also, all costs incurred i.e. parking, service tax, vat, stamp duty and registration plus the price of the property should be greater than equal to capital gain X right?

    Thanks
    Rohit

    • 1,2 Yes it is fine
      3. You need to buy another property within 2 years & construct property within 3 years. If you buy underconstuction property and it is taking longer, income tax dept is not very strict about it. As long as you have paid installments and developer has allocated you the unit, you can claim benefit even if it is not complete in 3 years. You need to put this amount in the Capital Gains Account scheme till the money is invested in new property.

  114. Dear Sir
    In continuation of my above mail 1st Jan -16 I have one more query ” Whether the new Flat in Bangalore which I am planning to buy can be in the joint names of myself and my daughter who is in USA and also is married?

    Regards
    K. Srinath

  115. Dear Sir,

    A very informative article. I request your guidance please.

    I have 1 NA plot(Nagpur) , 2 flats on my name(one NaviMumbai, one Pune). Both more than 3 years after possession. I also have one more 3rd flat (Mumbai) – extremely delayed construction, almost ready but don’t know about OC status. I have option to take possession or sale before possession.

    I wish to understand which is better option to save maximum C tax or get maximum exemption 1. to sale Pune flat and Nagpur plot, take little loan and buy a flat in Mumbai 2. keep all the capital gains in CG bonds 3. sell the third flat before possession and keep CG in CG bonds 4. any other options, combinations you recommend

    Thanking You
    Regards

    Varsha

    • Hi Varsha,

      I think it all depends on which property you want to sell and which one to hold. Caital Gains tax should not be main consideration for selling particular properties. First you need to decide which properties you want to sell. teh decide what is the best way to save tax on that.

  116. Hi i have residential flat which i want to sell after long term capital gain after indexation i should invest full sale amount in 3years locking bond or only capital gains and can i utilized the pending amount for fd purpose or share market
    For eg sale amount 40lakhsafter indexation capital gains 15 lakhs so i can invest only 15 lakhs in tax saving bond or residential house to save or complete 40 lakhs sale value or if only 15lakhs rest 25lakhs i can use for other purpose.. Thanks in advance

  117. Sir,
    My father sold his house in Jan 2016 for 1.54c.. He constructed it in 1991. He plans to invest 50L of the sales proceeds in tax savings bonds and doesn’t plan to re-invest. He was told that if he invests in tax savings bonds, he needs to pay only 10% on the balance net off indexation value and brokerage. Based on calculation, the indexation cost is 28L for property constructed in 1991. Is this correct?

  118. Hi,

    I purchased a residential plot for Rs 60,000+Rs 20000 (duty & tax) in 1996. Further I build the house in this land which costed me Rs 6L in 1988. I renovated this house in 2010 and spend Rs 6L. Now, 2016 I sold this property for Rs 35L. Please help me to understand, what is the amount I need to invest in new property or bonds from this amount to avoid CG tax.

    Regards,

  119. Pushpendra Varshney

    Dear Mr. Jain,
    A long term capital gain arose in F.Y 2014-15 to the extent of 20 Lacs. by sale of plots which was used in construction of another residential house property, which is now completed in January 2016 in which an amount of 40 Lacs is invested, for which I hold all bill/supportings. Return for ass. year 2015-16 is till date not filed.
    Please advise what is now needed.
    P. Varshney

    • Hi, Have you filed the return now. You need to show capital gain amount and the invesment amount to claim the capital gains benefit.

  120. Hi,

    Please let me know to get the exemption u/s 54 EC on sale of residential property which is fully constructed and possession has taken in 1981, in that case whether full amount of sale needs to be invested in bonds or only amount of long term capital gain need to be invested

  121. if sale consideration received through post dated cheque then which date is considered for sale, date of registered sale deed or date of actual payment received for the calculation of long term capital gain

  122. Hi Vivek
    Thanks for answering our questions.
    I have a quick query. I am selling my flat in March 2016. I have calculated the capital gain.
    Do I need to file the return and show the profit in this year?
    New regulation says that the last date of filing return is 31st Aug 2016. Till that time can I keep the Profit/ Capital gain amount in a FD and then transfer it to a capital gain account or do I have to it immediately?
    Please confirm, it is only the capital gain which is taxable and so, I just need to calculate and keep that amount in the bank and the rest amount I can invest anywhere?

    Best Regards
    Sourav Majumder

    • Hi Sourav, Yes you need to keep the profit / capital gain amount in the Capital Gain Scheme within 6 months from the data of sale or before filing of return.

  123. Dear Vivek jain,
    First of all thank you for the thread bare analysis of the complex legal issues and providing response to individual queries.

    Request you to provide your valuable guidance for the below mentioned situation.

    Mr X is the owner of 2 acres of agriculture plot purchased in 1960.Got converted 1.5 acres to non agriculture usage in 2008.
    Entered into JDA with builder jan 2010 with 45%( 50 houses) of the built area to him(Mr x).Mr X died in 2012.
    One of the legal heir has sold one( out of 8 flats under partition made in 2014) flat under construction for 48 lakhs in Oct 2014.period of holding is more than 36 months hence LT asset.No cg Tax has been paid at the time of JDA
    Pl let me know what is the cost of aquisition for the legal heir to arrive capital gain.As still 9 houses are to be dealt with pl suggest the best way as to adopt the land value separate and building value or give a combined price.
    Thanking you in advance Ramani

    • You should get the combine cost of all the houses and then allocate it to each flat as cost price. Also, would suggest to take help of local CA / lawyer to go through the agreements etc to get the correct advice.

  124. stespected sir
    i have sold one commerrcial property today after holding for 4 years
    also purchasing residencial property same time
    will i need to invest total consider amount of sale
    or only capital gain can b invested and remaining funf i can use for busines and rest i can take home loan and take dual benifit
    kindly guide me the best way
    thanks

    • Hi Vasant, if you are selling commercial property, then you need to invest ENTIRE Sale proceeds into residential house to get capital gain exemption.

  125. Thanks Vivek for your detailed yet simple explanation to a complex issue. Hope you can answer my specific queries.

    I bought a residential property under construction in 2010 and registered the agreement in the same year. Over the years I’ve paid the builder based on the demands upon completion of slabs (first through bank loan, then directly to the builder since 2014). I’ve now sold the property which is yet to be completed, and will register the sale deed soon. The questions I have are

    1. Will the VAT, Service Tax and TDS paid to the builder qualify for computing the cost of the property?
    2. Will the indexation apply based on the date/year of payment or from initial year (2010)? i.e. do I need to compute indexed cost for each payment separately and add them up?
    3. For home loan EMIs paid, should I calculate the principal component in the EMI to include in the cost of the property?
    4. If my sale proceeds are Rs 1cr, and LTCG is Rs. 10L, do I need to invest full Rs. 1cr in another property to claim IT relief on the Rs. 10L gain? What if I only invest say Rs. 30L in the next year in another property?

    • 1. Cost of property will include total costs including VAT, Service Tax, TDS etc
      2. You will need to compute indexed cost for each payment separately
      3. Loan EMI is not relevant as the cost of property will include the payment to the builder
      4. You need to invest the Capital gain amount in other property or Capital Gain Bonds. If you are investing property in next year, then you need to deposit money in Capital Gain account scheme in the interim.
      http://wealth18.com/how-to-save-capital-gains-tax-on-sale-of-property-in-india/

  126. Sanjay Harlalka

    Dear Mr.Vivek,

    I have sold a commercial property after holding it for 5 years.
    As advised by you in your article and queries above, I have calculated the indexed cost of acquisition and the LTCG ( sale consideration received less indexed acquisition cost).
    I intend to deposit only the LTCG amount in REC bonds ( & not the entire sale consideration).
    Kindly confirm the above is in order to get full exemption from CG Tax.
    Regards, Sanjay

    • Hi Sanjay,

      If you are depositng in Capital Gain bonds, then you just need to invest the Capital Gain amount (not entire sale proceeds).

  127. I bought an apartment-YY to save capital gain tax on another property I had sold earlier. The date of allotment (from the builder detailing flat number, area in my name) of this apartment YY is 01Dec2014 and the date of sale deed registration is 10May2016. How do I calculate the 3 year period (Long term) for selling apartment YY. Is it from date of allotment or date of sale deed registration. Kindly help in this regard and point me to the correct notification.

    • If you are selling the property before possession, then you can use the allotment date as date of acquisition

      If you are selling the property after possession, then you need to use the possession date as date of acquisition

  128. i have a tenanted commercial property. the saME HAS GONE FOR REDEVELOPEMENT. on redevelopement, i will receive the same shop with same area back but with ownership. do i have to pay capital gains on the same?

    • Hi Vidhita, As the previous property was not owned by you, there is no sale… so no capital gain should be applicable.

      However, please check with your local CA / lawyer regarding your circumstances that whether the previous occupancy is “ownership” or not.

  129. Dear Sir,

    My father holds one house, one flat and one plot in his name. Now he wants to sell the plot as well as the house and together invest the amount received from the sale into one residential property. Can he do that? Thanks

    • Hi Amit, Yes he can do that as long as the new investment covers the total capital gain from sale of both properties.

  130. Hi,

    I am wanting to make a donation to an NGO, for which I am a trustee for their infrastructure . I intend to do this by selling by second house in bangalore and closing the loan of my existing house and donate the remaining money to the NGO. Kindly advice if capital gains can be exempted for this purpose. Or any other advice to better handle this.

    • Hi, Capital Gain deduction is not available for donation.

      However, you can claim deduction under Section 80G upto certain limit and with conditions.

  131. good day. want to know that if one had bought a flat in delhi (which was under lease hold by mcd that time) thru sellers ”WILL”about 22 years back . now it is freehold area but did not get it registered due to time shorage but mutation in mcd is done in ones name. on other hand have a house in punjab which was inherited about 40 years back. if one has to sell the house in punjab will the flat which is still not registered in name be counted as 2nd house and the profit out of sale of house in punjab be counted as what ???

    • Hi Neeraj,

      I suggest you to discus with your local CA as I am not very well aware of process by which MCD flat ownership was given.

  132. Hello Vivek,

    Thanks for the lucid and informative article! I would be grateful for advice on this matter:
    1. I own an independent, self-occupied house. I wish to sell it and move into a smaller apartment.
    2. In May 2016, I booked an apartment in a large, under-construction residential project which is scheduled to be completed by April 2018. I have obtained allotment letter in July 2016 (which, from your article, becomes my ‘date of acquisition’!) and am paying instalments demanded from time to time, from my own savings.
    3. Please clarify the following:
    • How soon do I have to sell my existing house in order to claim exemption from capital gains tax?
    • Suppose I have NOT been able to sell my existing house by the time my new apartment is ready for occupation, what are the implications? Should I move into my new flat and pay income tax (calculated at actual rental income or on ‘notional rent’) on my old house till it is sold?

    Thanks and best wishes
    Mani

    • Hi Mani,

      You can claim deduction for capital gain for any new investment in residential property one year prior to sale. i.e. in your case, you have till June 2017 to sell your old house to claim new deduction for new appt investment.

      For rent out property (or notional income property), you can claim FULL interest paid. Do the property where you are paying higher interest, that property should be treated as rent out property.

  133. I HAVE A FLAT IN MY NAME PURCHASED IN THE YEAR 2001. AS I AM RETIRING FROM BANKING SERVICE SHORTLY,I AM PLANNING TO SELL THIS FLAT AND PURCHASE A BIGGER FLAT IN MY WIFE’S NAME,WORKING FOR THE CENTRAL GOVERNMENT ORGANIZATION BY AVAILING BANKS LOAN IN HER NAME AND THE SALES PROCEEDS OF THE FLAT IN MY NAME. CAN YOU PL HIGHLIGHT WHETHER I CAN GET THE EXEMPTION FROM LONG TERM CAPITAL GAIN TAX BY INVESTING THE ENTIRE SALE PROCEEDS IN THE PROPERTY PROPOSED TO BE PURCHASED IN MY WIFE’S NAME?
    PL CLARIFY. THANKS AND REGARDS

    • Hi,

      As you are selling your property and thereby capital tax is under your name, then you need to invet under your name to claim the exemption.

      Even if you are the joint owner, you can claim the benefit.

  134. Hello,

    We had bought a twin flats in the year 2004. Since I was working out of India that time, the flats were registered in the name of my younger brother whilst myself and my father were also equal contributors to the purchase of this property. It was decided on mutual trust that all three of us would hold equal share in this property. Now, we have to sell this property and all three of us have to invest into independent properties (apartments). Kindly suggest how we could do so without LTCG burden?
    The original purchase price is Rs. 11L and we intend to sell it at 75L.

    Thanks in advance for your advice.

    • Hi Vikas, The LTCG will be levied on the person who actually hold the title. If the flat is in your brother name and he is the registered owner, then the LTCG liability is on him. He can save LTCG tax by investing in another property in his name or joint name. He cannot claim the benefit for the property in your name.

  135. Hello Vivek
    We have one house in the sole name of my husband and 1 flat in my name.We want to sell our house which is in name of my husband. My queries are
    Can we purchase a new flat in joint names to save the LTCG. If in future I sell the flat which is in my sole name what will be the tax implication

    • Hi Manjul,

      On sale of flat in your husband name, you can invest in residential property in joint name to claim the capital gain benefit. You will get the benefit as long as your husband is co-owner of the new property.

      In future, if you sell your flat, then the capital gain liability is on you. If you sell your flat within one year of buying new joint flat, you can use the investment in new joint flat for claim against capital gains.

  136. My wife has purchased a flat on 26th September 2014. The agreement value is Rs 20 lacs. Now she intends to sell this flat at Rs 30 lacs.

    She does not have any other property in her name.

    1. How much tax will she be required to pay?
    2. Can this tax be avoided by investing the income from this deal in another flat?
    3. Does she require to declare this income in the IT returns for 2016-17?
    4. If point 3 is yes, then is tax to be paid on this amount?
    5. If point 3 is No then what is the process?
    6. Any other method mentioned in the law which will save the tax as much as possible?

    Thanks in advance for the response with your advice

    • Hi Jayesh,

      As the property is sold before 3 years, it will be treated as Short term capital gain.

      1. Rs 10 lakh profit is added to her income and taxed as per normal slab.

      2. No, you cannot save tax on short term capital gain
      3. You need to show this income in the return for FY 2016-2017 (AY 2017-2018) when you file return in July 2017.
      6. You can take benefit of investment in 80C instruments upto Rs 1.5 lakhs,

  137. I want to sell my flat purchased in 2010, invest the sale proceeds in new flat in my wife’s name. My wife is working and she will take the remaining amount home loan in her name only.what will be tax implications

    • Hi Ashu, If you sell flat in your name, then the capital gain tax liability is on you. You will not get capital gain benefit if you invest that capital gain in your wife’s flat. You need to be co-owner of the new flat to claim the benefit.

  138. Two and half story house
    Ground story built in 1984

    First floor built in 2010 with loan
    Second floor half built in 2010
    Completion certificate not taken for first and half second floor

    Now willing to sell first floor only

    Can construction to complete second floor and modifying the rest of house reduce burden of capital gain.

    Loan amount return will be exempt

    Since we have not taken completion earlier for first floor. Cost of indexation will be from which date

    • Hi Pal, You should take help from local CA as the deduction benefit will depend on the registry process for different states. If the floor registry is allowed, then 2nd floor construction may be treated as Investment in other property. If not, then it is just the part of same property (no new residential property).

  139. Naraindas Tekchandani

    My friend had purchased a flat in a cooperative society & got the possession on october 2001, in those days there was no
    system of necessarily getting sale deed registered only the share certificate & possession letter used to be sufficient documents so how can he submit the registration or sale deed to claim long term capital gain if he wishes to sale it now?

  140. Purchased shop in 2006 for 3 lacs 50 thousand. Sold the shop for 17 lacs. Shop is on wifes name. How to save on capital gain tax.
    we want to buy another shop. Last year we purchased a house on loan but my wife’s name is second.
    pls advise
    tks
    G.M.Gomes

    • You can save the capital gain from Sale of COmmercial property:

      1) by investing ENTIRE Sale amount in a residential property
      2) by investment PROFIT Amount in Capital Gains Bonds

      You will not save capital gains tax by investing in another shop.

  141. Hi, I have purchased a flat for INR 8 lacs in 2004. I’m expecting to sell it at around 48 lacs in the current year(by Oct 30). In parallel I’m buying a new house by 30 Sep. I also have another house which I had bought in 2011 (EMI’S are still being paid and likely to get over by DEC 2017).Pls guide on how I can save Long term capital gains on the flat I’m selling.

    • Hi Santosh,

      As per the rules, you can claim the long term capital gain benefit by investing in new residential propoerty. But the condition is that you should not have more than one property at the time of investment.

      If you buy a property in Sep, then you will have 3 homes (as compared to 2 allowed). So it is better to make investment in new property after selling the old one.

  142. MR. A HAS TAKENAN UNSECURED NON INTREST BEARING LOAN OF RPS 50 LAKHS FROM HIS BROTHER B. AFTER 3 YEARS THEY MUTUALLY DECIDE WHEREBY A TRANSFER HIS RIGHT IN THEIR FATHERS PROPERTY TO B IN CONSIDERATION OF LOAN EARLIER TAKEN. WHAT WILL BE THE CAPITAL GAIN IMPLICATION. HOW & WHEN WILL THE PROVISIONS OF TAX WITHHOLDING U/S 194IA COMPLIED WITH.

  143. i have sold my shop & residential property. There are 48 lacs LTCG. can i get taxation rebate on purchase of new residential property above 50 lacs where as I have already four residential property..

    • If you already have 4 residential property, then you cannot claim capital gain benefit by investing in another residential property.

  144. Hi,
    Please assist me on urgent basis. I had bought a house in August,1980 for an amount of Rs 66000/-. I had bought in company’s name and now I wish to now transfer it in an individual name. In that case do I need to pay capital gain tax?

    • Hi Sanket, Yes it will be treated as transfer of asset. You need to calculate the capital gain as buyer & seller as separate status.

  145. i got property by regd. will by my mother -in 2011 now i want to sale it -will i be charged with long term capital gain ? in case of regd. will -plz reply

    • Yes you need to calculate the capital gain. However, you can take the purchase cost as original cost incurreed by your mother to buy the property. If she bought is befre 1981, then the value in 1981 need to taken as cost of aquisition.

  146. i have sold my residential house to a promoter to build an apartment in which i will get a flat and an amount of money. will the capital gains tax include only the amount of money or the cost of the flat also? or in other words will the cost of flat be deducted while calculating capital gains tax as it will be my new residence?

    • Hi Yes, the total sale consideration will be the cost of flat + money. You need to calculate the capital gains based on that. What is written in the sale agreement. There must be an amount mentioned for purpose of calculating stamp duty.

      You can claim capital gain tax benefit for the amount invested in the new flat.

  147. Hi, I bought a property in December 2004 and spent almost 25% of its acquisition cost for repairs in the year 2014. I am in the process of selling the Property and should be done with the complete sale in the first week of April 2017 (purposefully pushing it to April ’17 to take one more year of indexation). Can I account for the Repair costs too as a part of the acquisition costs? If yes, how do I compute the Capital Gains, taking into account the two different years of spending (buying the house in 2004 and renovating it in 2014)?

    • Hi Nikhil,

      If the cost of repairs is huge and in nature of addition or enhancing the property (not just general repairs), then you can consider that as cost as well. Yes, you need to calculate the indexed cost separately for both based on the year of purchase and expense.

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