Long term Capital Gains Tax n fresh investment

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  1. Max Makhija

    Max Makhija New Member

    Dear Sirs,
    I am in process of selling my inherited home, this was purchased in 1976, my query is substantial Capital gains will result.
    I had purchased a under construction flat in 2011 and i continue to pay slab wise payment, I have paid 70% of the money already.( Under Construction total flat value is 60% of inherited home ! )
    How does one treat capital gains ??

    The Money I will get is nearly double than the money that i have invested or paid or have yet to pay,( since the 2014-15 IT amendment says only one house is allowed, so i am going to be in a fix, as the other house is in my name.)

    Also, the year i am selling is 2014 and one that I invested is 2011 ( IT act allows 1 year Previous to the sell date !), so, how do i Solve this puzzle ?
    Please help.
  2. rudrabose

    rudrabose Active Member

    As per Section 54 of the Income Tax Act, capital gains exemption can be claimed if the house was purchased 2 years after or 1 year before selling the house.

    In your case, it has already been 3 years and therefore you cannot claim capital gains exemption with the under construction flat purchased in 2011
  3. rudrabose

    rudrabose Active Member

    The Amendment brought in Budget 2014 says that exemption can be claimed if the entire Capital Gains is invested in 1 house only.

    It does not say anything about the total no. of houses.

    As the Capital Gains from sale of flat in 2014 have not been invested in the flat purchased in 2011, therefore there is no problem in claiming exemption.

    You only have to purchase another residential house and invest the entire capital gains arising from sale in that new residential house.
  4. Max Makhija

    Max Makhija New Member

    Thanks, So- I am free to invest this money in a new house and adjust the whole capital gains, against that investment !
  5. rudrabose

    rudrabose Active Member

    Yes, you are free to invest this money in a new house and claim Capital Gains Exemption :)
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