Capital Gain tax on selling land

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    GOPAL GUPTA New Member

    We r intended to sell land property bought 11 year back and would like to purchase a residential house with the sale proceed. As per IT section 54F if cost of new house is more that net sale proceed, entire capital gain tax is exempted. However my question is as follows:

    If suppose net sale proceed is Rs. 100 lakhs and cost of new residential house is 80 lakhs & if we spend Rs.20 lakhs on further construction on new property, shall this will also be exempted from capital gain tax.

    or my 2nd question, if cost of new house is less than the net sale proceed of original land, remaining amount can be deposited in national bonds to claim exemption.

    Please advise
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    1. Yes, you can claim Exemption of Rs. 20 Lakhs spent on construction.
    2. Yes, you can deposit the balance amount in Bonds and claim exemption under Section 54EC
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