gift and sale of property - captial gain implications

Hello Pankaj, My father owns a plot allotted to him in 1990 at a cost of 1.5lacs(A) I own a house bought at 13lacs in 2001 in which my father is residing.(B) I also own a plot bought at 40lacs in 2008.(C)

Now my father wants to gift the plot (A) to me and i want to sell the plot(A) immediately to construct my own house on plot(C). The estimated sale price for plot A is 45lacs and i plan to fully invest it for constructing my house on plot C. In return i am gifting house(B) to my father where he will continue to stay.

My understanding is that since the gift of plot A to me is from father to son, the sale of plot A by me can be considered as long term capital gain. So i could claim exemption of captial gain from this transaction since i am investing it back to construction of my own residential house. Is this correct? Are there any procedure to be followed?

Appreciate your advise.

asked Jul 29 '11 at 22:44 by srikanthml 6112


Your understanding is correct.

Section 54F will be applicable here. Just make sure you follow all conditions correctly.

  1. Execute proper registered gift deeds to transfer properties.
  2. Construct house on plot C within three years of plot A sale, with cost more than sale consideration of plot A.
  3. Invest whole sale consideration received from plot A sale into capital gain account scheme and construction expenses has to paid from there.

answered Jul 29 '11 at 23:44 by pankaj 5.2k320

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Asked: Jul 29 '11 at 22:44

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Last updated: Jul 29 '11 at 23:44