LTCG on sale of residential plot

Dear Sir, We are in the process of selling a residential plot of land. Can the indexed gains be used to buy another plot land and in the process can I save on LTCG? Thanks

asked Sep 18 '11 at 08:30 by roger 31223


To save income tax after selling residential plot, section 54f can be applied.

There won't be any tax benefit if another plot is bought, but if a house is constructed on the new plot within three years of old plot sale, benefit can be taken.

To save tax fully, new residential property cost must be more than sale consideration of plot. If its less, income tax would be applicable on proportionate basis of gain.

If construction of new house is not done before income tax return filing of financial year in which gains occur, whole sale consideration amount has to invested into capital gains account and payment to builder/seller should be done from there.

Also, following conditions have to be fulfilled:

  1. Possession of new property must be taken within two years from sale of old property. Or new house can be constructed within three years of sale.
  2. You should not be owning more than one residential house(flat/house/apartment) at the time of buying new property.
  3. If total residential houses owned by you is two (including new property), you should not buy another one within next three years of purchase. Or in next three years, total owned residential houses should not be more than two.
  4. New property should not be sold before next three years.

answered Sep 24 '11 at 14:19 by Pankaj Batra 5.2k320

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Asked: Sep 18 '11 at 08:30

Seen: 1,969 times

Last updated: Sep 24 '11 at 14:19