Capital gains on sale of residential flat.

In december 2006, I inherited a residential flat which was bought in 1991 for Rs. 1,25,000. I sold the flat for Rs.24,00,000 in april 2011. I stay in another residential flat of my own. My salary and interest income is Rs. 2,08,900 for full year. My age is 26 yrs. Mediclaim premium paid is Rs.5000. Total TDS cut is Rs.4800. I want to save tax on capital gains. Is there a time limit for depositing in recl bonds? in case, if i invest in a house property, can i sell my existing flat within next 3 yrs and acquire one more new residential house property? Please help

asked Feb 28 '12 at 11:25 by smartmicky6 1111


First, see long term gains computation below:

Purchase Year = 1991-92, Purchase Cost = 125000, Cost Inflation Index (CII) for purchase year = 199
Sale Year = 2011-12, Selling price = 2400000, CII for sale year = 785
Indexed Purchase price = 125000 x (785/199) = 493090
Long term capital gain = 2400000 - 493090 = 1906910
Income tax on capital gain = 1906910 x 20% = 381382

if you want to save this income tax fully, you will have to buy a residential house property for cost more than long term gains (19.1 lakh) u/s 54. There won't be any issue if you sell current flat. As long as you buy a new house property and don't sell that before three years, tax benefit would be available. Possession of new house property will have to be taken before April, 2013. If possession is not received before 31st July, 2012, long term gains amount would need to be deposited into capital gain scheme account.

You won't be eligible for section 54EC (capital gain bonds) now, as investment period is six months from sale.

answered Feb 29 '12 at 15:08 by pankaj 5.2k320

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Asked: Feb 28 '12 at 11:25

Seen: 1,350 times

Last updated: Feb 29 '12 at 15:08