Query regarding Long Term Capital Gain Tax

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  1. Dear Sir
    I sold a property in July 2012 & bought a new property also in July 2012 by investing long term capital gain of the previous property in new property thus getting long term capital gain exemption
    Now , I want to sell of new property before holding it for 3 years
    What are my tax inpmications
    1. vis a vis old property
    2. vis a vis new property
    3. vis long term gain be treated as short term capital gain or taxble at capital gains tax rate
    Mohan Saran Satsangi
  2. Neha Sharma

    Neha Sharma Active Member

    If you sell the New Property before 3 years - the gains from old property as well as new property would be taxable.

    The amount of Cap Gains exemption which you claimed as an exemption earlier would be reduced from the Cost of Acquisition.

    For eg: If you purchased the new property for Rs. 30 Lakhs and claimed Rs. 18 Lakhs as exemption under Section 54, and you are now selling it for Rs. 40 Lakhs, the profit would be computed as under:-

    Cost of Acquisition of New Property = 30 - 12 = 18 Lakhs
    Sale Price = Rs. 50 Lakhs
    Capital Gains on Sale of New Property = 50 - 18 = 32 Lakhs

    This Cap Gains on Sale of New Property would be Short Term Cap Gains and taxable as per Income Tax Slab Rates.
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