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Hello Sir, I recently (2013) sold off a flat that I bought in 2005 and planning to use that money to buy a piece of land. I believe in this case I may have to pay the capital tax, correct? In case I build a new house in that land (which is actually my original intention), how much time do I have to do so? Can I start construction of the house in 2015, which is the 3rd year from now? If yes, should I specify the details of my sale and purchase to IT department in 2013, 2014 and 2015? Thanks Balaji asked Feb 24 '13 at 06:34 by beekay7 1●1 |
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Construction on land should be completed within three years from date of sale of flat. There is no issue if starts in 2015. You should show long term capital gains in your IT return for FY 2012-13 and claim deduction u/s 54 for constructing new residential property. But as construction would not be completed before last date of return filing (31st July 2013), you should open a capital gain scheme account and deposit unused gains into this account. Amount from this account can be used to pay to land seller and to builder/architect etc for construction. answered Feb 25 '13 at 19:18 by Pankaj Batra 5.2k●3●20 Thank you very much for the reply sir.
I will be actually using most of the money towards buying the land with little left in hand. SHould I still open a capital gain scheme account and deposit the remaining in there?
Also, you have mentioned the payment to the land seller should go from the capital account and not from my regular bank account, where the money is currently parked. Is my understanding correct?
Thanks
Balaji
(Feb 26 '13 at 08:08)
beekay7
To avail tax benefits its mandatory to open capital gain scheme account, so you should open one with whatever small amount left.
Payment to land seller and towards construction can from any account, but payments from capital gain scheme account can only go out to builder/seller/material supplier/architect etc.
I hope you understand the difference.
(Feb 26 '13 at 09:42)
Pankaj Batra
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