I sold ancestoral property in Aug 17 and kept Capital gain in the Bank account under Capital gain account scheme. Than purchased new large house in July 19 using funds in Capital gain account scheme Plus my own savings. Later in Dec'19 sold IInd ancestoral property. Can Capital gain from IInd ancestoral property be set off with my own Savings used previously in July 19 (< 1 year) & Investment in NHAI capital gain bonds.
Yes, if you have not shown you self earning to purchase the new property in July 19, in the Income tax for the last year.
If you have not filed Income Tax yet than you can club the ancestral property Capital gain ans show the purchased property of July 19.
The option to claim capital gain exemption under Section 54, in respect of two houses, shall be available as the amount of capital gains does not exceed Rs 2 crore. If It is comes under 2 crore, claim set off before July 20.
1. LTCG can be set off only against one original residential /agricultural property.
2. Since you have already utilized LTCG for first house THEN sale proceeds of second house cannot be benefited for new house.
Yes that can be done. The sale proceeds from the 2nd ancestral property along with your savings can be invested in order to avoid capital gains tax.
AUG 17 :- Sold 1st Ancestoral Property JULY 19 :- Bought a House. From Capital gain of 1st Ancestoral Property & Other funds Saving DEC 19 :- Sold 2nd Ancestoral Property and have another Capital gain. My Question is - Whether LTCG from selling of 2 ancestoral property (Aug17 & Dec19) can be set off against 1 house bought in between time of July 19 ?
Property bought in July 2019. Now you want to offset the gains accrued in dec 2019 by selling the 2nd ancestral property by showing it as an investment in the house bought in July 19. That cannot be done.
You sold the 2nd ancestral property in December 2019 and you have to invest it further but you cannot show it in a property which you bought before selling the 2nd ancestral property.
Taxpayer can avail of tax benefits where long-term capital gains (LTCGs) arising on sale of more than one flat are invested or will be invested in one residential house in India.
If the bought house amount value is more than both the ancestral property than you can show it otherwise not.
- As per Section 54 & 54 F of the Income Tax Act, you can re-invest the long term capital gains amount in residential house property and claim an exemption therein.
- Further , no tax shall be paid , if you use the entire gain to buy another house within 2 years from the selling of your old property .
- Since, you sold property on 17 th August 2017, and which resulted in long term capital gain, hence within two years ,i.e. July 2020 you can purchase new property ,and the said purchase was as per rule.
- Further, you can claim exemption on investment in two houses if the capital gain does not exceed Rs. 2 crore, and this benefit you can gain once in your life time.
You have two years from the day of selling your old property to buy or construct a new property to be eligible for the tax exemption. Moreover, you will be eligible to claim tax exemption under section 54F even if you buy a property up to one year prior to selling your old property. In this case, you can declare the capital gains amount that you have used to buy the property as re-investment of capital gains.
No.....you can only invest amount in NHAI and REC bonds upto 50 lakhs
Exemption under section 54 can be claimed in respect of capital gains arising on transfer of capital asset, being long-term residential house property. To claim exemption under section 54, another house should be purchased within a period of one year before or two years after the date of transfer of house.
Since as per the above rules, you have already purchased the new property, you may not be able to avail the exemption under the provisions of section 54 to benefit out of long term capital gains tax as you have utilised the opportunity fully within two years of selling the old property, hence you may not be eligible for exemption from income tax for the second property sold later on, for LTCG
You can claim exemption on investment by selling two houses on the basis of the following clause under section 54 of IT Act:
"The seller should purchase a residential house either 1 year before the date of sale/transfer or 2 years after the date of sale/transfer. In case the seller is constructing a house, the seller has an extended time, ie. the seller will have to construct the residential house within 3 years from the date of sale/transfer. In case of compulsory acquisition, the period of acquisition or construction will be determined from the date of receipt of compensation (whether original or additional compensation)."
As per above, since you have utilised your savings towrds the balance of sale consideration amount, and as the second property has been sold within one year from the date of purchase of the property, you can declare the capital gains amount that you have used to buy the property as re-investment of capital gains.
You can discuss with your CA and move further.
Capital gain exemption can be availed only once. The new assets bought to utilize the capital gain must be hold for three years.
You can not avail exemption for your second house.
you can invest the capital gain of up to Rs 50 lakh in NHAI and REC bonds within six months of the sale of land or the return filing date, whichever is earlier, to claim LTCG tax exemption
