Sir, we bought a resale flat (A) in Mar, 2006 for rs. 47 lacs for which we took a bank loan of Rs. 45 lacs. We plan to sell the flat (A) for Rs. 105 lacs and after we repay the loan outstanding of Rs. 40 lacs, we will be left with net amt of Rs. 65 lacs. We plan to purchase a resale flat (B) for Rs. 120 lacs and want to take max. loan amt for the purchase since the loan eligibility is there. How much is the min. amt to be re-invested from the net sale proceeds of flat A for purchase of flat B so that there is no tax on capital gains. thanks
1 Answers
Please see long term gain computations below:
Purchase Year = 2005-06, Purchase Cost = 4700000, Cost Inflation Index (CII) for purchase year = 497
Sale Year = 2011-12, Selling price = 10500000, CII for sale year = 785
Indexed Purchase price = 4700000 x (785/497) = 7423541
Long term capital gain = 10500000 - 7423541 = 3076459
As per section 54, if you buy a new residential house property for any amount more than this gain (30.77 lakh), there won't be any income tax on gains.
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