I have sold my commercial property in May 2018 which was my business place as well. There is a substantial capital gain since I purchased the shop in 2003. I have the following questions: 1. Can I invest the sale value amount in buying 2 separate commercial properties? If so , is there any deadline to purchase the properties (i.e. month/year)? 2. If by rule the amount can be invested in purchasing just 1 commercial property then is it necessary to start the business on the purchased property before any specific month/year? 3. Can the business expense (for eg. franchise cost, interiors) and stamp duty/registration cost be included in the cost of purchase to reduce my capital gain tax? 4. Can I purchase one/more residential property instead? and if yes what would be the deadline for the purchase?
Hi,
- In Point no. 1 and 2, you can purchase the commercial property but no income tax exemption is available.
- Only stamp duty cost will be included provided no other benefit is taken under any provision of the Act.
- Yes you can purchase one residential property and income tax exemption is available subject to conditions mentioned under section 54F.
Thanks
You can save tax from the sale of commercial property only by investing in either residential property or bonds mentioned under section 54EC. However now you can't use 54EC as you need to use it within 6 months of sale.
You can buy 1 residential property and this exemption can also be availed only if you own just one property before this.
You need to purchase the property within 2 years from the date of sale or construct it within 3 years.
If you are not going to use the amount till March 2019 then you need to deposit this amount in capital gain account scheme before filing your return to claim exemption and then use it within 2/3 years respectively to claim exemption.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
Dear Sir,
Hope you are doing well !!
1 & 2. Yes, you can purchase the 2 separate commercial properties.
However, the new property should be residential house property to claim the benefit of exemption u/s 54F.
Since the property is a commercial property, benefit of Section 54 shall not be available.
There is no deadline for commercial property.
3. Only stamp duty will be included in the cost of purchase subject to no benefit is taken earlier.
4.For claiming exemption u/s 54F-The new residential property must be purchased either 1 year before the sale or 2 years after the sale of the property/asset.Alternately, the new residential house property must be constructed within 3 years of the sale of the property/asset
Hi
1.Re investment in commercial property is not allowed for claiming exemption for capital gain tax.
2.You cannot invest in commercial property .to save capital gain tax.Reinvestment in residential property is only allowed.
3.Yes registration expenses forms part of cost,but it should be residential property for exemption purpose.
4.No ,investment in only one property is allowed.
Hope it helps
