Sale of commercial property

1) Yes you can add registration and stamp duty value charges in the cost of new residential house property.

2) Yes you can buy a residential property from the proceeds of commercial property.

3) Yes you need to open CGAS if the entire amount of net consideration from the sale of commercial property is not invested in residential property before the filing of ITR.

4) You can deposit both ways but it should be in CGAS before filing of ITR.

5) There are two options available in your case. One is section 54 EC which allows investment of capital gain in bonds upto Rs. 50 lacs within six months from the date of transfer of property. There is no concept of CGAS under this section.

Other is section 54F in which you can purchase another reisdential property not more than one except existing. In this you need to invest net consideration.

Hi,

Please find below the answers to your queries:

1. Registration and stamp duty value charges can be included as part of the total cost of new residential house property.

2. Yes commercial property sales amount can be used to buy a residential property.

3. If the payment is staggered you will need to open CGAS account.

4. The deposit can be done either ways. However, please ensure that the same is deposited before the ITR is filed if the entire amount is not utilised.

5. Yes you have an option of investing in specified bonds to save taxes. The duration/lock in for these bonds is 5 years.

Hope this clarifies.

Regards,

Nikhil.

As the agreement is registered in your name irrespective of the possession and full payment, you would be considered as legal owner of the second HP at the time of sale of commercial property which restricts you in availing LTCG exemption.

Also if we go by possession or full payment concept, if there is any purchase within 2 or 3 years from the sale of commercial property then also you would be liable to LTCG tax in the year of purchase or construction for which you availed exemption earlier.

Yes if you own more than one house property at the time of sale of the commercial property, you will not be eligible for LTCG exemption.

Regards,

Nikhil.

Hi,

1. Yes, you can buy a residential house from sale proceeds of your commercial property. However, if you want full exemption then, the entire sale proceeds should be invested in buying a residential property.

2. Yes, you need to deposit the amount in CAGS account and you can route the money through your saving account.

3. Yes, you have an option to invest in REC/ NHAI bonds upto maximum amt of 50 lacs.

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

Thanks and regards

Abhishek Dugar

CA CS B.Com

Yes you can reinvest in residential property out of sale proceeds.If you cannot reinvest within time limit allowed then open CGAS and deposit the amount before return filling.

Reinvestment can be made in bonds (NHAI /REC) within 6 months from date of sale.Maximum amount allowed is 50 lacs here.

Yes you will be deemed owner in these case and you will not be allowed for capital gain exemption then.

You can take the definition from Income from house property head.

You can refer to sec 22 to 27 of the income tax act for the definition of House property.

As per decision made in CIT vs Kodandas Chanchlomal, house property for the purposes of sec 54 has the same meaning as the concept of house property u/s 22 to 27 of the IT Act.

Regards,

Nikhil