How to minimize Capital Gain Part – 1: Capital Gain from Transfer of a Residential House-Exemption of Capital Gains u/s 54
Introduction
Any long-term capital gains arising on the transfer of a residential house (including self-occupied house) will be exempt from tax if,
Conditions
1) If the assessee has within a period of one year before or two years after the date of such transfer purchased, or within a period of three years constructed, a residential house.
2)The assessee must not transfer the new house, within a period of three years from the date of its purchase or construction, as the case may be. Otherwise the exemption allowed under this section
shall be reduced from the cost of the new house, in computing the capital gains arising therefrom.
3)If the whole or any part of the capital gain cannot be so utilised for acquisition a residential
house before filling the return, the same should be deposited in Capital Gains Accounts Scheme, 1988 in order to claim exemption, beforethe due date for furnishing the return.
How much amount will be exempt?
The amount of exemption available is equal to the amount so utilised or the amount of capital gain, whichever is less.
If the amount of capital gain is appropriated towards purchase of a plot and also towards construction of a residential house thereon, the aggregate cost should be considered for determining the quantum of deduction, provided that the acquisition of plot and also the construction thereon, are completed within the specified period as aforesaid.
In simple words, capital gains shall be exempt to the extent it is invested in the purchase and/or construction of another house.
Related posts:
- Capital Gains exemption u/s 54F: Capital Gain on Transfer of Asset, other then a Residential House (Sec. 54F)
- Capital Gain Tax Exemptions on Inheritance Property
- Capital Gain Exemption u/s 54, 54B, 54D, 54EC, 54F, 54G, 54GA Table
- Capital Gain Tax on Agricultural Land
- Capital Gain Account Scheme
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{ 18 comments… read them below or add one }
Dear Sir,
I have sold the self occoupied flat purchased @5LAc in year 2000 for Rs 22 lacs and bought the new flat at 31 lac in the same financial year ( while buying the flat i have availed the bank loan of Rs 2o lac ). 1 )Am I eligible for the the exemption for the capital gain .2 ) Do i need to do any investment to save tax and when & how much and where should i invest ?
Respected Sir, Milind G
If you have purchased the flat on 2000 and sold on 2009 then it is long term (as more than 3 years) so exemption U/S 54 will be available to you. Further the exemption available under this section is the amount you envest or capital gain which ever is less, as per your details your capital gains amount to near Rs.14,21,000/- so the investment which you made of Rs. 31 lac is sufficient.
I bought a house in the year 1971 at Rs 25000/-
I would sell this house in 2009-10 at Rs 45,00,000/-
What would be the capital gains in this case?
Regards
T S Rajaraman
What rule of Capital Gain available for the if one has sold some area are under residential plot i.e what 54, 54 AE, etc. Can it br done in Bank?
What rule of Capital Gain available for the if one has sold some area are under residential plot i.e what 54, 54 AE, etc. Can it be done in Bank?
Sir, I am a house and which is a sop of me can I take Depreciation on that my House property as personal use and not taking 30% repairs and renewals charges as in section 24 of IT Act 1961.
I PURCHASED ONE FLAT ON 2006 OF RS.850,000/- SOLD ON 2010 AND AGAIN PURCHASED NEW FLAT COST OF RS.40.00 LACS AND LOAN OF RS.33.00LACS. IM ELIGIBLE OF EXEMPTION U/S.54 ,PLS. HELP ME
Sir,
whether the money being received on sale of property can be taken in cash or has to be taken only by cheque by the seller of property having a PAN ?
one can claim exemption under section 54F for purchase of house property outside india?
one can claim exemption under section 54F for house property purchase outside India?
can i avail discount u/s 54 if i purchase a flat through bank loan
(my long term capital gain is 25,00,000/- and i purchase a flat of 30,00,000/- and take a loan of rs. 24,00,000/-)
i purchase a flat on 01.07.2005 through builder agreement and take a passession on dt. 01.01.2007 and paid full amount of flat before passession
then after i do a registery on dt. 01.01.2008 and sold this flat on dt. 15.02.2010 what will we my long term or short term capital gain
dear mr. T.S. RAJARAMAN
PL GIVE ME THE COST OF HOUSE ON DT. 01.04.1981 AS PER GOV. RECORDS
THANKS
ASHISH GARG
09410856555
Section 54(1) of Income Tax Act 1961 provide that upon sale of residential house the assessee should have purchased or constructed a residential house. The question arise as to whether the words residential house mean one house or whether the assessee will be entitled to exemption in respect of amount invested in two or more houses. Please site any case law on the above matter.
NARAYAN DAS HEDA
MOB NO:- 9821149015
Sold a residential flat & earned the long term capital gain of Rs. 40,00,000/- in F.Y. 2010-11. Whether the assessee can get the exemption U/S 54(1) if the amount of capital gain invested in 2(two) residential property in 2(two) different places.
Narayan Das Heda
Mob No. 9821149015
Dear Sir,
I bought the new flat @ 37 lacs, 5 months before selling the self occupied house purchased @ 6 lacs in year 2002 for Rs 10 lacs in the same financial year ( while buying the flat I have availed the bank loan of Rs 25 lac ).
1 ) Whether am I eligible for the exemption for the capital gain.
Hi Can I claim the deduction under 54 if I own more then 2 houses at the time of transfer?
Thanks
Hi,
We sold our house in september 2010 and bought another one under construction in November 2010.
However, we have not yet opened a capital gains account for the remaining amount.
However,we have to file the return now. So, is it alright if we open the capital gains account now and then file the return a little late?
Thanks