Capital gains from sale of property

You have hold the property for more than 3 years and hence it will be considered as long term capital assets and any gain from that property will be considered as long term capital gain.

Further as it is a long term capital asset, indexation benefit can be claimed and hence total capital gain will be calculated as follows

Total consideration received. 46lacs

Less : exp in respect of sales. X

Less indexed cost of. 35.57

acquisition 22.5x264/167

Amt of long term cap gain (ltcg) 10.43 lacs

Now if you invest this capital gain of 10.43 lacs for purchase of new house property within 2 years of sales of old asset ltcg will be exempt us 54 of income tax act.

Or you can construct a new residential house too.

For more details please do contact us.

Period is considered 3 years as it is sold during financial year 2016 17.

The period of holding ia reduced to 2 years from fy 2017-18.

Dear Sir,

Capital Gain would be 10.43 lacs. Purchase next house within 2 years form the date of transfer to avail the exemption of capital gain tax. If new house not purchased till the time of ITR filing, deposit the amount in capital gain deposit scheme and utilize the amount within 2 years otherwise the entire capital gain would be taxable.

Thanks

Dear Sir,

You sold house in March 2017, i.e. your A.Y. 2017-18 for the income earned in F.Y. 2016-17. you due date for filing of ITR was 31.07.2017 and the capital gain from the sale of the above property was to be disclosed in the ITR of A.Y. 2017-18. If you had not filed the ITR till date, please file it before 31.03.2018.

Law says if the capital gain has not been invested before the filing of ITR for the year in which the transfer took place i.e. F.Y. 2016-17, to avail the exemption you need to deposit the amount in capital gain deposit scheme and utilize the amount within the period as mentioned in section 54.

Thanks

Hi,

You will need to reinvest the capital gains within a period of 2 years to ensure that you don't have to pay the capital gains tax.

Regards,

Nikhil.

hi,

If the house was sold in Mar 2017, you will need to reinvest before the return filing date i.e. 31st July 2017. if the return has not been filed, please do so before 31st March.

you will have 2 years from the return filing to ensure that the reinvestment is done as per the law.

Hope that clarifies.

regards,

Nikhil

Yes to save capital gain tax you have to purchase new property with in 2 yrs and definitely you have to disclise these in your return,declaring that amount of capital gain has been deposited in capital gain scheme account and will be used for new purchase.

In case you invest in under construction project then ,it should be completed with in 3 yrs of date of sale of old property.

Point to be noted here is completion of project not commencement.

So it is advisable to look into these before investing in new property.

1st thing it is from date of sale of property and not from the date of filing of return. Thus calculation of 2 years will be end up on march 2019.

Further although as per Section 54, the assessee is given 2 years to purchase the house property or 3 years for the construction of the house property, but the capital gains on the transfer of the original house property is taxable in the year in which it was sold. The Income Tax Return of that year is required to be submitted in the relevant assessment year on or before the specified due date for filing the Income Tax Return. Hence, the assessee will have to take a decision for the purchase/construction of the house property till the date of furnishing of the income tax return otherwise, the capital gain would become taxable.

To avoid the above situation, the Income Tax Act specifies an alternative in the form of deposit under the Capital Gains Account Scheme.

Further more, if you want to invest in under construction property, the exemption is still available.

In short, period for 2 years will end up on march 2019,

Amount is required to be invested for purchase of new house before filing of return or if not decided property than put it under capital gains accoun Schem before filing of return.

Exemption for underconstruction property is allowed for section 54 and time will be extended for 3 years from the date of sales of old house property.

Hi

Since the property was sold in FY 2016-17, the amount, if not invested, had to be deposited in capital gain deposit scheme by due date of filing of return of FY 2016-17.

As you have neither invested nor deposited in CGDS, the capital gain was taxable and no exemption can be claimed.

Had you filed the income tax return for FY 16-17? If yes, was the capital gain and sale of property shown in return?

Did you put the money in cgds scheme and shown it in your return of income.

The last date to put the money in cgds scheme has already gone. If you have not put it, you can't claim the exemption.

The cost of the property in 2010 was 20 lakhs

The indexed cost of the property in 2017 will be =272/148*20 = 36.8 Lakhs

Property was sold for 46 lakhs

So the Capital gains will be 46-36.8= 9.2 Lakhs

Bank loans will not form part of this computation. However, if you have spent any significant amount on the improvement of the house, that can be considered and hence will decrease the capital gains to that effect. So as of now the capital gains is 9.2 lakhs.

Hope this solves your query.

Regards,

Nikhil.

Hi

Based on the new data, the capital gain amount works out to be around 9.25 lakhs. (46-(20*2.72/1.48)).

So, the tax would be around 1.85 lakhs.

In order to exempt capital gains, you can invest 9.25 lakhs in another residential house property within 2 years of sale or construct within 3 years.

If the amount is not invested before due date of return filing and taxes are not paid, the amount needs to be deposited in capital gain deposit account.

#tax amounts are exclusive of any interest or cess

Dear Sir,

Capital Gain would be Rs.9.24 lacs. To avail the exemption, you need to purchase the property within 2 years from the date of transfer i.e. April,2019. If you will be unable to purchase the property till the date of filing ITR i.e. 31.07.2018, please deposit the amount in Capital Deposit scheme with schedule bank otherwise the entire amount would be taxable.

Thanks

Hi,

Your capital gain will be around 9.25 lacs and the tax amount would be INR 1.90 lacs approx.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Dear Sir,

Amount of the Capital Gain that you have to be invest is as follows.

Total consideration received. 46lacs

Less : exp in respect of sales. X

Less indexed cost of. 31.62

acquisition 20x264/167

Amt of long term cap gain (ltcg) 14.38 lacs.

I could understand that you are asking for int paid on loan taken for house.

How ever the loan was taken for purchase of house and not improvement of house and hence expenses in name of interest on loan taken can not be claimed.

capital gain cal has nothing to do with loan amount.

You capital gain will come somewhere around 9 to 10 lacs.

Hello Sir,

You cannot keep the funds in your normal savings account. You will have to deposit it in a separate capital gains account before the due date of filing of returns. i.e. 31st July 2018 or 30th Sept 2018 whatever is applicable in your name.

I am assuming that you sold the property in April 2017 and not March 2017.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, FCA, LLB, CERT. FAFP