Capital Gains Tax on Sale of 2 Properties

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  1. noddy

    noddy New Member

    I own 2 properties 1 is a builder flat which is under construction and was booked by me in 2013. Another is a piece of land purchased by me thru registered sale deed in 2011. I want to sell both the properties and buy 1 apartment along with my brother (50% share each).

    I under stand that sale of flat will result in short term capital gain and sale of land will result in long term capital gain.

    My question is will I have to take the entire consideration (both short term and long term) into account while investing the amount in the flat or only the long term capital gain to avail the benefits of section 54F.
  2. Neha Sharma

    Neha Sharma Active Member

    Dear @noddy

    1. You will have to pay Tax on the Short Term Capital Gains on the sale of the Builder Flat.
    2. Only the land held by you for more than 3 years will qualify as Long Term and Capital Gains exemption can be claimed only for this land.
    3. In case you are buying a Residential Apartment, you can claim exemption under Section 54 and you would only be required to reinvest the Capital Gains
  3. noddy

    noddy New Member

    1. Thank you for your reply.

    2. I understand that since this is sale of land I will have to re-invest the entire consideration under section 54F in a residential flat to claim full exemption or otherwise I will get proportionate amount as exemption as per formula and the balance I will have to invest in LTCG bonds i.e. For example if full consideration is 1,20,00,000/- and capital gain is 1,00,00,000/- and I invest 90,00,000/- in residential flat U/s 54F. I will get 75,00,000/- as exemption for flat as per formula and balance of 25,00,000/- I will have to invest in LTCG bonds to avail of full exemption.

    3. Please let me know if I am correct.
  4. Neha Sharma

    Neha Sharma Active Member

    Yes Noddy, you are correct.

    If it is a vacant land - you can claim exemption only under Section 54F

    However, if you can show that this land was being used for Residential Purpose, you can claim exemption under Section 54 wherein only Capital Gains would be required to be invested.

    Even if there is a temporary room on the plot which can be used as a Residential Premise, you can avail benefit of Section 54
  5. noddy

    noddy New Member

    1. Thank you for your prompt answer.

    2. The land belongs to a jute mill and is not vacant.

    3. Thanks once again.
  6. Neha Sharma

    Neha Sharma Active Member

    If the land belongs to a Jute Mill, I'm assuming it would not be Residential and Section 54F would be applicable in this case as Section 54 is only applicable on sale of Residential Property
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