The Indian laws calculate on the Index base purchase price and selling price of the plot and according to that reinvestment amount in the property.
So in your case purchase year and selling year plus reinvestment year needs to know along with price.
Rules regarding sale of property and reinvestment in the case of senior citizens
I am a senior citizen, aged 70 years, retired from private service long ago and presently live with my wife in Kochi under the care of my son in a rented flat. All through my career life, I was employed with small trading firms and small scale industries. As my earnings never crossed the tax exemption limits, I have never filed any tax returns. Moreover, my employers never maintained any proper records of employment for their own reasons. While I was working in Gujarat, I had booked a house with a builder there and with his help I was able to get a loan of 2 L from BOB for this purpose, which was paid back in instalments of Rs. 3400 and I had to take up many part time jobs to make the repayment possible. I was given possession of this property in 1998. The cost of the tenement at that time was 2.9 L. Except this property, I don't have any immovable or moveable property anywhere. I also do not have any income from any source except some interest I receive on 2 FDs deposited by me long ago.The present total maturity value of these are around 5 L. I have been filing form 15H for this for exemption from deduction. We depend entirely on our son for our living. Recently, I sold this property for 29.75 L and deposited the money in bank FD account. Some people known to me says that I have to buy a property for this amount within an year, failing which tax @ 20℅ will have to be paid on it. Others say there is a two years time period for it and also if I buy a plot and construct a house, I will get 3 years time for it. I would like to know what actually the rules say in this regard. Though I have carried out some extension work as well as regular maintenance work during the twenty years of my ownership, I don't have any bill for it. Moreover, finding a suitable property within an year is very difficult. Buying a suitable property is not anything to be done in a hurry. So, what should I do in such a case? Is there any provision in law for a senior citizen having no source of income to keep this money in bank and take care of his expenses with the interest he receive from it, so that he doesn't have to depend on anyone? Please reply at your earliest. Thanks. Mamachan Joseph.
Asked 4 years ago in Property Law
Religion: Christian
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10 Answers
See there can be two conditions in your case either you invest the capital gain amount in new property within 2 years if ready to move in property or within 3 years if constructing to seek exemption on tax on capital gains.
Second option can be the capital gain amount can be invested in government bonds like of NHAI to save capital gain tax.
See the tax applicable is on the capital gain amount only for calculation of same from the Total amount received the cost of acquisition (Indexed Cost of Acquisition/Improvement i.e to adjust inflation) and cost of improvement need to be reduced and rest is capital gain amount on same if you fail to invest as above you need to pay the tax.
Long term capital gain tax will levy which can be save by investing in purchase of new house within 2 years or new residential house property must be constructed within 3 years or by investing them in certain bonds.
Deposit the specified amount in a public sector bank or other banks as per the Capital Gains Account Scheme. Investing in FD, now LTCG will impose on this year return.
Long term capital gain will levy on index value.
LTCG is exempt for an individual on sale of a residential house property, if such gains (not the whole consideration) is utilised to purchase or construct another residential house
2) It should be noted that the new house should be purchased within one year before or two years after the date of transfer. In case of construction, the new house should be constructed within three years from the date of transfer.
3) If you are not able to invest the specified amount in the manner stated above before the date of tax filing or 1 year from the date whichever is earlier, deposit the specified amount in a public sector bank (or other banks as per the Capital Gains Account Scheme, 1988).
1. You said "I have never filed any tax returns".
a) The above means that you have not reflected the House Purchased by you in your Income Tax returns.
b) The above further also means that you are NOT eligible to claim Long Term Capital Gains (LTCG) on the sale proceeds of the said Non-Declared House.
c) The above further also means that you are liable to pay full income tax (minus property indexation) on the sale proceeds of the said Non-Declared house.
2. LTCG can be invested as follows:
a) Within Two years in a New Residential property.
b) Within Three years, in a self-under-construction property.
c) Capital Gain Bonds issued by Govt. and certain specified FDRs' of Bank .... Interest herein is Tax Free.
There are certain rebate provisions available in the income tax act for the senior citizens and they can clean those rebates While submitting the income to the income tax so far as the capital gain is concerned you have to pay the capital gains based on the period of holding up the property if the holding period is less than 3 years then you have to pay short term capital gains and the amount of income after taking the indexed cost of the property @ 20% plus surcharge in case of long term capital gains after calculating the indexed profit tax rate is 10% in both the cases you have to declare the income in your Income Tax by declaring the sale consideration and the indexed cost based on the year of acquisition of the property and accordingly tax is calculated.
As per Income Tax Act you can save the capital gain tax by investing the amount of your capital gain up to a certain period and for the purchase and construction of the property you have to consult your tax consultant to know in detail about all this
You need to invest the sale proceeds in form of capital gains in some other property or capital gain bond. If you don't invest the same it will incur you capital gain tax in the gain you made by selling the said property. You need to invest the same within 24 months in case of immovable property
When you sell a house, you pay capital gains tax on your profits. There's no exemption for senior citizens they pay tax on the sale just like everyone else. If the house is a personal home and you have lived there several years, though, you may be able to avoid paying tax.
In the case of sale of house property:
These expenses are deductible from the total sale price:
a. Brokerage or commission paid for securing a purchaser
b. Cost of stamp papers
c. Travelling expenses in connection with the transfer – these may be incurred after the transfer has been affected.
d. Where property has been inherited, expenditure incurred with respect to procedures associated with the will and inheritance, obtaining succession certificate, costs of the executor, may also be allowed in some cases.
When you sell your home, the capital gains on the sale are exempt from capital gains tax. Based on the Taxpayer Relief Act of 1997, if you are single, you will pay no capital gains tax on the first $250,000 you make when you sell your home. Married couples enjoy a $500,000 exemption.
Assessees can get an exemption by investing long term capital gains from the sale of house property in up to two house properties against the earlier provision of investment in one house property with same conditions.
The exemption under section 54 is available when the capital gains from the sale of house property are reinvested into buying or constructing two another house properties (prior to Budget 2019, the exemption of the capital gains was limited to only 1 house property).
The exemption on two house properties will be allowed once in the lifetime of a taxpayer, provided the capital gains do not exceed Rs. 2 crores.
The taxpayer has to invest the amount of capital gains and not the entire sale proceeds.
If the purchase price of the new property is higher than the amount of capital gains, the exemption shall be limited to the total capital gain on sale.
Conditions for availing this benefit
1. The new property can be purchased either 1 year before the sale or 2 years after the sale of the property.
2. The gains can also be invested in the construction of a property, but construction must be completed within three years from the date of sale.
3. In the Budget for 2014-15, it has been clarified that only 1 house property can be purchased or constructed from the capital gains to claim this exemption.
4. Please note that this exemption can be taken back if this new property is sold within 3 years of its purchase/completion of construction.
1. Dear sir you will be liable to pay long term capital gain tax on the money you have recieved from selling of your property.
2. If you invest the money for buying another property then you can save this tax time you will get for investment is two years from date of sale of flat.
