Capital Gain Tax on Sale of Ancestral Property

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  1. Anil Bhasin

    Anil Bhasin New Member

    I am staying in a house which was purchased by my late father at the time of purchase only ground floor existed first floor was constructed by self 1989-1990 FY and that is where I am staying. Property A

    I had invested in a house which was under construction possession given on 19th March 1990. This property sold on 29/5/2013. Property B
    Sale proceeds Rs.1.10 Crores and Rs.0.10 Lacs sale proceeds of fixtures and fittings total Rs.1.20 Crores received.
    Had invested in a residential house on 22nd June 2012 agreement date token money paid on 23rd/26thMay 2012.Property C
    This house is still under construction likely completion June 2015. Is this qualified for before one year from date of sale for the purpose of claiming exemption from capital gains. Property C approx. value Rs.67Lacs.
    I had also invested in a house in USA Rs.41Lacs.on 11th Oct.2013 Property D.
    Before filling the return for the year ending 31/3/2014 that is on 26/7/2014 I had deposited Rs.1.00 Crore (stating that Rs.40Lacs already invested) in Capital gains Account with Maturity date of 30/4/2015.Can the maturity date be extended.

    Can I invest further sums in property C & D to close the capital gain account.
    Will the service tax paid on under construction property C be allowed as amount spent for the purposes of claiming capital gains exemption U/s54. Similarly interest on Bank Loan. Property C

    In the alternative should I spend the capital Gains amount to buy /purchase a new house such that the amount of capital gain is fully invested. Property E.
    Many of these issues have cropped up because of change in sec 54 during the last budget where the concept of a single residential house in India was introduced.
    Last edited: Jan 26, 2015
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    1. Amount invested in Property C would be allowed to be claimed as an exemption under Section 54 from the amount of capital gains arising on the sale of Property B
    2. Service Tax paid on under construction property is also allowed to be claimed as an exemption under section 54
  3. D. Sampat Kumar

    D. Sampat Kumar New Member

    Want to understand how capital gains is calculated on property acquired through a gift deed and subsequently given for development to a builder.

    A person has acquired a property, fair market value of which is Rs. 1.00 crore. This property has been given for development in the same year and the developer constructs 8 flats, each costing Rs. 30 lakhs. Cost of construction of 8 flats is Rs. 90 lakhs Owner gets 4 flats and developer 4 flats. Owner keeps the four flats for himself. Developer sells his portion of flats. When would the owner be required to pay capital gains? Is it at the time of sale of his portion of the flats? In such case is the cost of acquisition considered as the fair market value at the time of the gift deed or the cost of 4 flats at Rs. 30 lakhs each? Can someone clarify this please.


  4. Anil Bhasin

    Anil Bhasin New Member

    My basic query covers the affect of amendments on transaction/s initiated before
    the last amendment in 2014 to Section 54 which basically states that one has to invest in Single residential house in India, Since I had already invested in the second house property D in USA before the amendment that is in Oct 2013 where the initial investment was 20% balance was taken on loan by my son i now wish to pay further amount to reduce the loan increase my share and reduce /make the capital gains as zero/nil. from out of the amount lying in my Capital gains account with a nationalised Bank. The amount invested in property C alongwith amount invested in property D can they be both considered or at least the one in USA property D
    Can the maturity period of amount in the capital gains account be extended to three years currently maturity date close to 2 years.
    In the alternative can I invest in a new house Property E out of the maturity proceeds lying in the capital gains account with a nationalised bank the amount would be equal to or more than the caiptal gains.
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