Long Term Capital Gains Tax on Buy and Sell of Property

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  1. ManishN

    ManishN New Member

    Hi CA Experts,

    I got a query on Long Term Capital Gains Taxation as I had bought a property and then after a few calendar months I sold another of my property. I need to know if there is any Tax that is Payable.

    For Property-One
    purchase date - Feb 2006
    purchase price - Approx 20Lakhs

    For Property- Two
    Purchase date - Dec 2008
    Purchase Price - Approx 25Lakhs

    For Property-Three
    purchase date - Feb 2014
    purchase price - Approx 80 Lakhs

    For Property-One
    Sale date - Nov 2014
    Sale price - Approx 63 Lakhs

    As you would have noticed, I bought Property-3 and sold a property-1 with nine calendar months and made a capital gains of approx 43 Lakhs and I intend to do a part pre-payment of my Loan on Property-3. What I am interested is to know will there be any Long Term Capital Tax that needs to be paid.

  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    As Property 1 has been held by you for more than 3 years, therefore it qualifies to be a Long Term Capital Asset.

    And as the gains arising on sale of this long term capital asset (i.e. Property 1) have been reinvested in Property 3, therefore all the gains arising on the sale of Property 1 are exempted from levy of Capital Gains Tax under Section 54.

    However, this exemption is only available if the new property purchased is a residential house.
  3. ManishN

    ManishN New Member

    The Property - 3 is a residential Flat in a Apartment Complex. Does it still qualify for exemption, as it is not a house but a Flat ?
    Also, Section 54 talks about "Purchase of another residential Property within One Year before". Does the One year equals to calendar year or a Financial Year?
  4. Hemanth M C

    Hemanth M C New Member


    My father had a residential plot which he owned for about 10 years. In August 2012, we sold the plot. The amount recieved was put into Capital Gains Account Type A in July 2013. (Delay was due to certain health problems in family).

    As I read in the various websites/ forums, we are to use the amount in buying a new property within 2 years of sale of earlier property. Post the 2 years, we are to buy a plot and construct.

    Please advise if this understanding is correct? the 2 years time period was completed in Sep 2014 and we have 1 year left. We have not yet invested that amount in the LT CGAS...

    Can we still buy a constructed property like apartment etc or do we need to build our house?

    What are the other options we have?

    Please advise.
  5. gaurav_kumar

    gaurav_kumar Well-Known Member

    @ManishN : Yes, residential flat is considered as a residential house.

    1 year is considered from the date of sale of property. It is not financial year/ calender year but 1 year considered from the date of sale of property
  6. ManishN

    ManishN New Member

    @gaurav_kumar : Thanks a lot for you reply.
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