Ltcg
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
18 December 2013
my client sold a property and get LTCG. he wants to invest this Longterm capital gain in more than one residentail house. can he do such ? pl explain . while a judgement is given for reinvest in more than one falts but he wants to invest in seprate - seprate house. my client look a property jo ki pass pass m bani hue h lekin do no house k owner alag alag h . kya aisi do no house purchase kr skte h
18 December 2013
Are the seperate - seperate house a part of Unity of structure. i.e one building, or common floor, adjacent.
If not then LTCG will be only for one residential unit.
If yes then you can avail LTCG for more than one unit.
If not then LTCG will be only for one residential unit.
If yes then you can avail LTCG for more than one unit.
Querist : Anonymous
Querist :
Anonymous
(Querist)
19 December 2013
i get long term capital gain and I want to reinvest in residential property.I look two plot adjoining (pass pass me) and i want to build up a house on these plots.but owner of these plots are seperate seperate can i get exemption from long term capital gain as such investment. pl advice me
03 August 2024
Yes, it is possible to claim Long-Term Capital Gains (LTCG) exemption by reinvesting in more than one residential property, but there are specific conditions and provisions you need to be aware of. Here’s a detailed explanation based on the relevant sections of the Income Tax Act:
### **Relevant Provisions:**
1. **Section 54:**
- This section allows for exemption of LTCG if the capital gains are reinvested in a residential property.
- The exemption under Section 54 is available if the LTCG is invested in one or more residential properties, provided the conditions are met.
2. **Recent Judgment:**
- The Supreme Court of India, in the case of **"Gita Duggal v. Income Tax Officer"**, allowed the exemption under Section 54 if the LTCG is reinvested in more than one residential property.
### **Investment in Multiple Residential Properties:**
- **Investment in Multiple Properties:**
- According to the Supreme Court ruling and the general interpretation of Section 54, you can invest in more than one residential property to claim exemption. This is applicable provided the investment is within the limits and conditions stipulated.
- **Adjoining Properties:**
- If you are looking to purchase two adjoining plots and build a house on them, you can claim exemption under Section 54 if:
- The plots are considered as a single residential property from a practical and legal standpoint.
- The plots are adjacent but owned separately, it should be ensured that they are effectively used as one residential property for exemption purposes.
### **Conditions for Claiming Exemption:**
1. **Time Limit:**
- The new residential property/properties must be purchased within 1 year before the sale or within 2 years after the sale of the original property.
2. **Utilization of Proceeds:**
- The capital gains should be fully invested in the residential properties. If the capital gains are invested in more than one residential property, the exemption should be proportional to the investment made in these properties.
3. **Proof of Investment:**
- Ensure that you maintain proper documentation of the purchase agreements, construction costs, and other related expenses to substantiate your claim.
### **Action Steps:**
1. **Verify the Nature of Properties:**
- Ensure that the two plots can be considered as a single residential unit for the purpose of exemption. Check local regulations and practical aspects of combining the plots.
2. **Document Everything:**
- Maintain clear records of the transactions, including purchase agreements, payment receipts, and construction costs.
3. **Consult with a Tax Professional:**
- It’s advisable to consult with a tax professional to ensure compliance with the provisions and to address any specific issues related to your situation.
4. **Filing the Tax Return:**
- When filing your income tax return, claim the exemption under Section 54 and provide all necessary documentation and explanations to support your claim.
By following these guidelines, you should be able to claim the LTCG exemption effectively while investing in multiple residential properties.
### **Relevant Provisions:**
1. **Section 54:**
- This section allows for exemption of LTCG if the capital gains are reinvested in a residential property.
- The exemption under Section 54 is available if the LTCG is invested in one or more residential properties, provided the conditions are met.
2. **Recent Judgment:**
- The Supreme Court of India, in the case of **"Gita Duggal v. Income Tax Officer"**, allowed the exemption under Section 54 if the LTCG is reinvested in more than one residential property.
### **Investment in Multiple Residential Properties:**
- **Investment in Multiple Properties:**
- According to the Supreme Court ruling and the general interpretation of Section 54, you can invest in more than one residential property to claim exemption. This is applicable provided the investment is within the limits and conditions stipulated.
- **Adjoining Properties:**
- If you are looking to purchase two adjoining plots and build a house on them, you can claim exemption under Section 54 if:
- The plots are considered as a single residential property from a practical and legal standpoint.
- The plots are adjacent but owned separately, it should be ensured that they are effectively used as one residential property for exemption purposes.
### **Conditions for Claiming Exemption:**
1. **Time Limit:**
- The new residential property/properties must be purchased within 1 year before the sale or within 2 years after the sale of the original property.
2. **Utilization of Proceeds:**
- The capital gains should be fully invested in the residential properties. If the capital gains are invested in more than one residential property, the exemption should be proportional to the investment made in these properties.
3. **Proof of Investment:**
- Ensure that you maintain proper documentation of the purchase agreements, construction costs, and other related expenses to substantiate your claim.
### **Action Steps:**
1. **Verify the Nature of Properties:**
- Ensure that the two plots can be considered as a single residential unit for the purpose of exemption. Check local regulations and practical aspects of combining the plots.
2. **Document Everything:**
- Maintain clear records of the transactions, including purchase agreements, payment receipts, and construction costs.
3. **Consult with a Tax Professional:**
- It’s advisable to consult with a tax professional to ensure compliance with the provisions and to address any specific issues related to your situation.
4. **Filing the Tax Return:**
- When filing your income tax return, claim the exemption under Section 54 and provide all necessary documentation and explanations to support your claim.
By following these guidelines, you should be able to claim the LTCG exemption effectively while investing in multiple residential properties.
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