capital gain tax section 54 -property let out on rent

This query is : Resolved

jagdish (Querist)
Follow

16 June 2009 I sold residential property after 20 years of purchase at a profit and reinvested the profit along with additional personnal funds in the new residential property within one year of sale and rented out the same. Will I still be eligible for the Capital gain tax ? or for how long one is not allowed to rent it out to be eligible for Capital Gain tax?

CA CS CMA Srinivasan N

CA CS CMA Srinivasan N (Expert)
Follow

16 June 2009 Hi,
As per Sec.54, exemption is available subject to fulfillment of the following requirements:
(i) The transferor shall be an individual or the HUF,
(ii) The asset to be transferred must be of long-term capital asset, being buildings or lands appurtenant thereto, being a residential house,
(iii) The income from such residential house shall be assessable under the head "Income from House Property",
(iv) The transferor assessee should purchase a residential house in India within a period of one year before or two years from the date of transfer or construct a residential house within three years from the date of the transfer of the original house. (Construction must be completed within these 3 years.), and
(v) The new house property purchased or constructed has not been transferred within a period of three years from the date of purchase or construction.

There is no restriction on renting out as long as you are declaring the income under house property..
Hence the exemption is eligible..
Rgds

Message likes : 1 times