Long term capital gain tax on sale of residential plot

I had purchased a residential plot in 2004 for Rs.1.75 lakh (including cost of registration). I have purchased an under-construction flat in Oct'2013 at a cost of Rs. 35 lakh + 3 lakh registration cost. This is my first flat. Possession is likely to be given in March 2015. 20% payment ( Rs. 7 lakh) has been made by me in Nov'2013 at the time of agreement. Another 50% payment (Rs. 17.5 lakh) has already been made by bank against home loan in stages. Balance 30% (rs. 11.5 lakh) will be made by bank linked to the stage of construction before hand over in March'2015.

If I sale my residential plot for a value of Rs. 15 lakh in Nov-Dec'2014, how will I be able to save LTCG tax? Will the bank loan already paid to the builder qualify for exemption, if i pay the loan amount from the sale proceeds?

asked Jul 14 '14 at 11:52 by sarewarmm 111


Yes, you can save full income tax on capital gains earned from residential plot sale, if you invest whole sale consideration into a residential house property u/s 54f

You can pay home loan from sale amount, there is no issue in that/

There are some conditions for 54F applicability:

  1. You should not be owning more than one residential house property at the time of sale of plot.
  2. New residential property should not be sold in next three years of possession.
  3. Possession of new residential property should be received within two years of sale or with one year before sale of plot.
  4. In next three years, total residential house properties owned by you cannot be more than two.

answered Jul 15 '14 at 11:37 by Pankaj Batra 5.2k320

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Asked: Jul 14 '14 at 11:52

Seen: 3,595 times

Last updated: Jul 15 '14 at 11:37