LTCG on selling a flat and buying a plot

I am selling a flat which i had bought in 2004 for 20 lakhs at 80 lakhs in April 2011. I invested 65 lakhs in a plot (land, not house) in the month of February 2011 for which i took a bank loan of 55 lakhs. I plan to construct a house on this plot after 2 years. Can i repay the bank loan after 6 months and adjust my long term capital gain against the purchase of plot or is it not allowed to buy a plot (it says house) up to 1 year before sale of the property. The act says 1 year prior and 2 years post if buying a house and 3 years post if constructing a house.

asked Mar 22 '11 at 07:19 by Ajit 1111


Yes u can adjust your long term capital gain against purchased residential house property upto the Rs. 60 lacs and u must ensure that the construction of the house should be completed within 3 years from the date of transfer. and U/s 54 says that where capital gain not utilised for construction or purchase of the new residential house before the due date i.e 31 July,2011 of furnishing the I.T Return, it shall be deposited by him on or before the due date of furnishing the return, in the Deposit A/c in any branch(except rural branch) of public sector bank in accordance with the Capital Gain Account Scheme,1988.

answered Mar 22 '11 at 08:29 by sagar 4012

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Asked: Mar 22 '11 at 07:19

Seen: 1,396 times

Last updated: Mar 22 '11 at 13:27