Commercial Property sale and tax

GGN_Prop 1
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Dear Sir,

My father has one commercial property which he bought in 1998 @ Rs 1.49 Lacs under his name only. Now we want to sale this commercial property @ Rs. 40 Lacs. There is one house under my father name (single owner) and one flat under name of myself, my father & my mother. We want to buy one more underconstruction flat under name of myself, my wife and my father investing the money from commercial property. 1. Can you please guide me about the tax implication on selling this commercial property and buying one residential property? 2. Can my father invest the whole amount coming after selling the commercial property in buying one flat as mentioned above? 3. Can my father gift the money from commercial property to me and we can invest it in buying abovesaid flat?

Please support. Thanks

section-54f commercial-property residential-property long-term-gains capital-gains income-tax
1 Answers

If your father already owns more than one residential house properties in his name (single or jointly owned) at the time of sale of commercial property, he would not be able to claim tax benefits by buying another residential house property u/s 54F.

He can only save tax fully by investing whole sale consideration amount into capital gain bonds u/s 54EC.

Tax cannot be saved by gifting amount to anybody else. He can gift commercial property to you first and you can sell it and claim tax benefits by buying new property u/s 54F.

Pankaj Batra5212

Dear Sir,

Thanks for your reply. But I am still confused. Please guide what should we do to save capital gain tax?

We have already booked a underconstuction new residential flat and needs to pay for it. This flat is under name of myself and my wife. I asked the builder if we can enter one more name in the deed, he said it is ok to add one more in the names but maximum up to three only. Please suggest what we should do?

Thanks again

GGN_Prop•

As your father already owns two residential house properties, he can only save income tax by investing into capital gains bonds u/s 54EC.

Or he can gift/transfer property to you before sale. Then you can sell property and save tax against new flat purchase. But in this case as well you should not be owning (only properties for which possession has been taken) more than one residential house property at the time of sale.

Pankaj Batra•

Sir, is it possible if he can gift it to my wife and then my wife can sell it and can invest all money in new flat? If yes then what would be the procedure for it and will it be taxable to anyone. Thanks

GGN_Prop•
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