anup
1
HI,
I plan to sell one of residential house in which i am incurring a Long term capital gain of Rs.60 lacs. As i understand if i invest this gain in a anew property with in 2 years i can save on the tax.However i want to understand that can i invest this gain in 2 properties under construction which would be completed in 3 years time period or is it that i have to invest in one property only???
In order to save income tax fully on this gain of 60 lacs, whole gain has to be invested into a single new property.
If you invest in two properties, only one will be considered and it its price is less than 60 lacs, tax will be payable @ 20% on remaining amount (60 - new property price).
Thanks Pankaj,
Also would like to understand
1.Say i sell my property for 10Lacs such that 5 lacs is the notional cost and 5 lacs is profit (LTCG).Now if i invest this 10L across 2 new under construction properties each costing 10L over 3 years ,how would it be determined that in which property i am investing my LTCG and which property i am investing the COST.
2.If i sell one of these properties within 2 years before completion of construction with a profit of say 3 lacs and invest the entire amount in the first property .What is the tax i would be required to pay??
You can consider any one property whichever you want to show exemption for capital gains. It need not be declared anywhere, but in case IT department raises query, then you can show purchase documents of one of these properties. If you sell any property before three years, whole gain (say 3 lacs) will be added to your taxable income and taxed as per you slab rates. Income tax cannot be avoided in this short term gain. After paying income tax, you can invest this amount anywhere.
