Exemption on long term capital gain tax
Rajeev1978
(Querist) 11 December 2016
This query is : Resolved
My mother(65yr old) had inherited a house from her maternal side which she sold in 2012.She invested a part of the proceeds in a land and a house in the year 2013.She had taken some loan from relatives during the construction of the house.Now she wasnts to sell off the land and construct a top floor on the house and pay off her debts. Will she be eligible for Exemption on Long Term Capital Gain Tax?It may be noted that she had only one residential house in 2012 and even now she has that single house which she purchased in the year 2013
H.M.Patnaik
(Expert) 11 December 2016
Dear Rajeev,
As I gather from your Query,Your mother(a Sr. Citizen) have sold immovable property in 2012 and invested the proceeds in two different property i.e. a land and a housein 2013.
Is she an Income tax assessee and filed her returns in the above two financial years? If not,these belated returns can not be filed at this stage as it is barred by time for claiming exemption on Capital Gains made in 2013 even though you have invested during the allowable time frame of 18 months fro the date of sale.
Coming to Second part of your question,
if your mother disposes the landed property now,and invests proceeds thereof in the existing house,in such an event she will be eligible for exemption from payment of tax on Capital gains if any accruing from such deal as per provision of the Act.But for availing the same She has to file her Return of Income for the relevant assessment year.
H.M.Patnaik
(Expert) 11 December 2016
Dear Rajeev,
As I gather from your Query,Your mother(a Sr. Citizen) have sold immovable property in 2012 and invested the proceeds in two different property i.e. a land and a housein 2013.
Is she an Income tax assessee and filed her returns in the above two financial years? If not,these belated returns can not be filed at this stage as it is barred by time for claiming exemption on Capital Gains made in 2013 even though you have invested during the allowable time frame of 18 months fro the date of sale.
Coming to Second part of your question,
if your mother disposes the landed property now,and invests proceeds thereof in the existing house,in such an event she will be eligible for exemption from payment of tax on Capital gains if any accruing from such deal as per provision of the Act.But for availing the same She has to file her Return of Income for the relevant assessment year.
Rajendra K Goyal
(Expert) 11 December 2016
Discuss in detail with local tax consultant.
Ms.Usha Kapoor
(Expert) 12 December 2016
Before three years holding period you are contemplating selling of house property, she will be liable to short term capital gains tax at 20%. If after completion of 3years from the date of construction or land she will be liable to long term capital gains tax.Hence let he reinvest in any capital gains scheme in any public sector bank in India she should invest the considerations he got out for selling the land and purchase of a house.It will not be subject to LTCG tax.If she invests in bonds in section 54 IT Act 1961 etc for construction of one residential house which is equal to capital gain or more than capita gain she need not pay any ltcg tax. If the capital gain is more than residential house then excess of Capitol gain than the excess cost of capital gain- cost of the new house will be taxed as LTCG tax at 20%.
Rajendra K Goyal
(Expert) 12 December 2016
The query deficient of material information.
Who and when purchased the property, what was index at then. when and how much portion was inherited? First detailed exercise has to be done for finding expected capital gains.
It is better to spare quality time with some experienced tax consultant.
