Tax implication on sale of residential property- reinvested into commercial.

Hi

There is no exemption on capital gains if reinvestment is done in commercial property.

Capital gains shall be chargeable to tax @20% plus cess and surcharge, as applicable.

Sale proceeds of residential property can be use for purchase of new house/residential property and it will be tax free. If the same is use to buy commercial property it is taxable as Long Term Capital Gain/Short term capital gain based on the holding period.

On the other side if the capital gain invested in capital gain bonds, it will be tax free after five years. 

Dear Sir,

Hope you are doing well !!

Yes, you can use it but you'll not get any capital exemption for the same.

You need to pay the capital gain taxes on sale of residential property.

Amount of capital gain would be depend on purchase price, purchase date, sales consideration, sales date and any other improvement expenditure.

To get capital gain exemption, either you need to reinvest the amount in residential property or 54ec bonds.

We may assist you in entire procedure.

It is advisable to take a phone consultation for detailed discussion.

Hi

This will be fully taxable. No exemption on investment commercial property.

Taxablitydepends on your holding period.

When you sell your property that is owned by you for more than three years, any gain arising from such sale will be considered as long term capital gain. Long term capital gain is calculated as the difference between net sales consideration and indexed cost of property. ... Current Long Term Capital Gains tax rate is 20% 

Dear Sir,

In order to avail exemption u/s 54, net proceeds from sale of residential property should either be invested in other residential property or in govt specified bond. You cannot invest the amount in other commercial building.

Thanks and Regards

Shiv Kumar Aggarwal

You wont get any exemption from capital gain you earn from sale of such residential house.

Your entire capital gain would be taxed.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Capital gain will be taxable as capital gain exemption is not available on investment in commercial property.

Hello,

Capital Gain would be chargeable @20% plus cess on the sale of the residential property. No exemption against the same would be available for investment in any commercial property.

I hope this answer satisfies your requirements. 

Regards,

CA Hunny Badlani

If Capital gain is below 2Cr the two house properties can be bought or constructed. House property can be purchased within 1 year before the sale or 2 year after the sale or constructed within 3 years after the sale. Yes this concession is available once in lifetime.

With effect from Assessment Year 2020-21 corresponding to FY 2019-20, a capital gain exemption is available for purchase of two residential houses in India. However, the exemption is subject to the capital gain not exceeding Rs 2 crore. Also, the exemption is available only once in the lifetime of the seller.

The one time option is available only in case when your capital gains are less than 2cr and you are investing in 2 residential house properties and claiming exemption.

In remaining cases where reinvestment is made in single house property, there is no limit.

The one time option as mentioned by you is applicable only in the case where you are investing in 2 residential house properties and claiming exemption against the capital gain of less than Rs. 2 Cr.

Hi

Yes this is correct. In case of capital gain upto 2 crores you can buy 2 house property. & This is available only  once in a life time.

It's not exactly like that there are few benefit in that which are available once in lifetime.

You can read more here: https://www.taxontips.com/exemption-u-s-54-available-only-once-in-lifetime/