Sec 54F Exemption - if Residential converted to Commercial Property

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  1. A Mehta

    A Mehta New Member

    Hello ,
    i have like more than one question

    I have purchased a land in Fy2006-2007 with rs 295000/ including redg and have sold it and will be getting the amount 2200000/ tds will been deducted with 1% in few days

    1) I already hold a propriety in my name which was a residential in 2010(as per will of my grandfather , it was transferred to me )
    2) The Building was converted to commercial in 2014-15 for own use (office)
    3) How is the tax calculation for the gain ill make by this 10% net or 20%with cii
    4) can i re-invest the amount in a new residential house (will i be exempted from tax on my gains)
    5)have heard about capital gain account can i deposit it in that for now till i find a house to invest
    6)ill b receiving a single dd for the amount can i deposit in my Sb account for now and then transfer it to capital gain account in few days or deposit it directly to the capital gain account

    Thank You
    Last edited: Mar 10, 2015
  2. Anand Jain

    Anand Jain Member

    Section 54F would be applicable in this case wherein you can claim capital gains exemption for reinvestment.

    This is applicable if you dont own more than 1 house except for the house which you intent to purchase.

    The property mentioned by you above would not be considered as Residential if you have legally converted this into commercial by paying the conversion charges to the Govt.

    Till the time you finalise a property, you can keep the amount in the capital gains account. Receive it in your savings account and then transfer it to the Capital Gains Account
    A Mehta likes this.
  3. A Mehta

    A Mehta New Member

    Thank You for the detail

    1) I have paid my property Tax in Karnataka BBMP as a commercial
    is that enough or any other fees is to be pain

    2) till when do i have time to deposit the money to the capital gains account ?

    3) will i have to pay the full amount in capital gain account or only the gain i made by selling the property
  4. Anand Jain

    Anand Jain Member

    1. Payment of Property Tax as Commercial is not a sufficient evidence that it has been converted. The govt notifies areas and roads which are being converted from Residential to Commercial and charges a one time fee as well for the same. You should have all such records.
    2. Amount can be deposited in capital gains account before the filing of income tax return for that year
    3. The amount to be deposited depends on the section under which you intent to claim the exemption
    A Mehta likes this.
  5. A Mehta

    A Mehta New Member

    In sec 54f new amendment was made this budget as one can buy a residential house within india would be exempted , but need to know should I be investing only the capital gain after the indexation or the complete full amount I will get by sale of my new property ,

    The one grandfather's property I own is in a proper commercial area and comes in a zone with maximum tax slab of bangalore, being paying property tax , electrical bill and even water bills as commercial.

    Rec bonds
    Should I be investing full amount or just the capital gain post indexation
  6. Anand Jain

    Anand Jain Member

    To claim exemption under Section 54F - you have to reinvest the whole amount and not only the capital gains.

    Exemption under Section 54EC can be claimed for investment in REC Bonds and to claim exemption under this section - you only have to reinvest the Capital Gains
  7. prateek999ps

    prateek999ps New Member

    i wanted to ask whether any deduction of dues incurred on on conversion of residential property into commercial property is allowed...????
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