STCG or LTCG? Where should I keep the Capital Gain Amount?

Nitin Rao 1
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Nice to see your social finance website regarding your views.

I am in the process of selling my residential apartment ( a 2 BHK apartment) in Pimpri Chinchwad in pune and would be finalising it by this month end. The reason for selling is that I am shifting my location from Pune to Chennai due to change in my job. I cannot afford to continue the home loan and also pay the rent for the house I am staying in Chennai. I intend to sell this property and purchase a similar 2 BHK apartment in Chennai. Kindly advise me on the following:

  1. Where to keep the Capital Gain Amount? I mean which bank?
  2. I registered my property on 04-01-2008 and took the possession in January 2010. So would I fall in the STCG or the LTCG bracket?
  3. What is the time period till which I have to reinvest the Capital Gain Amount?
  4. Can I purchase Any conditions on the type of property that I purchase.

Thanks & Regards, Nitin Rao Chandavar Mobile: 95520 77521

residential-house long-term-gains capital-gains ltcg income-tax
1 Answers

After selling the old house, you will have to keep the gain amount into capital gain account scheme, which can be opened in any nationalized bank. This should be done before filing of return. Money can be kept in this account maximum for three years. Deposit in this account can be used to pay for new property. Once new property is purchased, this account should be closed with a letter from assessing officer.

You should assume date of registration as purchase date for capital gain computations and you would fall in LTCG.

In order to save income tax arising due to capital gains, you can reinvest the gain amount into another residential property within 2 years of sale or get a new house constructed within 3 years of sale.

You will have to only purchase a residential property (flat/apartment/house) or get one constructed to save income tax.

Pankaj Batra5212
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