Sunday, September 18, 2011

Sell anything but a house — buy a house save capital gain


By on 7:40 PM

On incurring long-term capital gains on the sale of any asset (excluding a property), and if you wish to buy a property in return, then you can claim an exemption under Section 54F of the entire long-term capital gains incurred if you invest the entire net sales consideration into the new property. Alternatively, if the amount of investment into the new property is lower than the net sales consideration, then you can avail an exemption on the

This benefit is available only if you have only one house other than new house.

The benefit of sections 54 and 54F is available to only individuals and HUF, whereas the benefit of section 54EC is available to all the assesses. 

In case a loan is taken to purchase the new property (whether ready possession or under construction), the benefits of deduction will also be availed under section 80C for the principle portion of the home loan and under Section 24 for the interest portion of the home loan. 

The second most important thing that needs to be kept in mind is that, these new assets purchased (as discussed above) on the reinvestment of the capital gains on the existing assets should be held for the period of three years from the date of purchase of the asset. 

If they are redeemed or sold within a period of three years of the purchase, then the entire long-term capital gains exempted earlier will be treated as short-term capital gains along with the benefits of the principle portion availed under section 80C and the same will be taxed at your slab rates.Hence, timing of the investment and sale is a very important factor that must be considered before taking
your investment decisions.Plan your taxes; don’t let the taxes plan you!

About Syed Faizan Ali

Faizan is a 17 year old young guy who is blessed with the art of Blogging,He love to Blog day in and day out,He is a Website Designer and a Certified Graphics Designer.

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