Capital gain tax when buying and selling properties at the same time

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  1. Praveen Kumar 123

    Praveen Kumar 123 New Member

    Hi,

    I own a house and a plot, I planned to sell the plot and buy a flat with the money.

    I was told by a CA that when I sell a property and if I use the gains I made in it to buy another property, I need not pay any capital gain tax.

    So in my case I need not pay any capital gain tax for selling the plot. But unfortunately it looks like the registration date for buying the flat is before the registration date of selling the plot.

    So can I levy capital gain tax in this case since both selling and buying of properties happening in the same financial year.

    Praveen
     
  2. sai tejesh(ca.final)

    sai tejesh(ca.final) Active Member

    No problem sir,
    in order to get exemption from capital gains, any house property shall be purchased within a period of two years after (or)1 year before the transfer of plot.
    But make sure that,the total net consideration received on sale of plot is invested in a new flat.otherwise only proportionate amount of capital gains will be exempted.
     
    Praveen Kumar 123 likes this.
  3. Praveen Kumar 123

    Praveen Kumar 123 New Member

    Thanks a lot Sai,

    I understand that if you sell the old property first you can easily show that you are using the money to buy the new property,

    But,

    If you buy the new property first how to show that you are using the money that is coming from selling the old property. I am anyway taking a loan to buy the new property. If i show that I am using the money coming from selling the old property to repay the loan, is that sufficient
     
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