CG on sale of second house.

I have 2 houses. One purchased in 1997 and another in 2008. Planning to sell the first one and invest the CG in another residential property. Can i avoid CG tax by doing so.

Please advise. srinivas

asked Feb 05 '11 at 06:38 by srinivas 16112


Since you have kept the house for more than three year, its long term capital gain. And under section 54, you are eligible for capital gain tax.

To save income tax on this long term gain, you can invest the amount again in buying another house (within a year before selling or within 2 years after selling) or construct another house within 3 years of sale or Invest in capital gains bonds within 6 months of sale (Section 54 EC of the Income Tax Act) issued by Rural Electrification Corporation, National Highways Authority of India and National Bank of Agricultural and Rural Development.

In case you are not decided about buying new property but intend to buy one later and still want a deduction on the tax on your capital gain, you must invest whole amount in Capital Gains Scheme of Deposit Account, which can be opened in any public sector bank branch. But if this amount is not used for buying new house within three years, tax on long term capital gain have to be paid.

Income tax on long term capital gains is 20% with indexation.

answered Feb 05 '11 at 09:11 by pankaj 5.2k320

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Asked: Feb 05 '11 at 06:38

Seen: 1,980 times

Last updated: Feb 05 '11 at 09:11