10 July 2024
Hi, I have a query regarding capital gain on residential house property (RHP). Suppose I sell my RHP1 that I bought in FY 2018-19 for 30 lakhs, for 80 Lakhs in FY 23-24. The LTCG from this comes out to be approx. 43 Lakhs. Now I buy a new RHP2 in FY 23-24 itself for Rs. 60 Lakhs and take exemption under section 54 for complete 43 Lakhs. 54 Condition is to hold onto RHP2 for 3 Years and construct it.
1. Suppose I get a good opportunity and sell RHP2 in FY 24-25 for say 85 Lakhs. The exemption under section 54 will be withdrawn. The capital gain on RHP2 will be short term of approx. Rs. 68 Lakhs. So i have to pay short term capital gain tax on Rs. 68 lakhs. A) Do I need to pay any tax on the initial capital gain withdrawn of 43 Lakhs? B) Do I need to pay any interest as the initial LTCG of 43 Lakhs arose in FY 23-24, but was now deferred and now being payed in FY 24-25?
2. Suppose I get a good opportunity and sell RHP2 in FY 27-28 for say 85 Lakhs after holding it for more than 2 Years but less than 3 years. The exemption under section 54 will be withdrawn. The capital gain on RHP2 will be long term of approx. Rs. 68 Lakhs. So i have to pay tax on long term capital gain on Rs. 68 lakhs. A) Do I need to pay any tax on the initial capital gain withdrawn of 43 Lakhs? B) Do I need to pay any interest as the initial LTCG of 43 Lakhs arose in FY 23-24, but was now deferred and now being payed in FY 27-28?
I know it is a bit extensive. Thanks for your help in advance.
10 July 2024
Also sir, in first case I will be in a bit of loss, as on 43 Lakhs now i have to pay STCG Tax, while before i was able to pay LTCG on it. Is it advisable so to hold the new RHP2 for atleast 2 years?
CAclubindia
