Sale of residential property

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saurabh (Querist)
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28 April 2016 Dear Sir,

I have sold one residential property amounting to Rs 2.90 Crore in FY 2015-16.I have purchased two residential property against it.
Can i claim exemption from both the properties.
Can i simultaneously claim exemption from sale of residential property and investing in govt bonds to save my capital gain tax.

thanks in advance

CA Durga Rao Arigela

CA Durga Rao Arigela (Expert)
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28 April 2016 1. Sorry saurab you can not claim exemption from both the properties. You are having an option to choose one of the property for claiming deduction but not from both. However if the two houses are adjacent to each other and you convert in to a single residential property by connecting through a Common passage or kitchen then you can claim deduction from both the houses.
2. For your second question- You can simultaneously claim exemption by investing in RECL or NHAI bonds

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Abhishek Ranjan Singh

Abhishek Ranjan Singh (Expert)
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28 April 2016 Assuming that it is Long term capital gain. You can claim only one house for deduction. First of calculate the Long term Capital Gain. Find out how much is Long term capital gain. How much you are invested in new property ( Take Higher value property). How much is the rest amount balance as a long term capital gain for tax. Invest this amount in the bonds to claim the full deduction.

Few points to be noted :

1- A new residential house property must be purchased or constructed to claim the exemption

2- The new residential property must be purchased either 1 year before the sale or 2 years after the sale of the property/asset.

3- Or the new residential house property must be constructed within 3 years of sale of the property/asset

4- 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 of sale, whichever is earlier, deposit the specified amount in a public sector bank (or other banks as per the Capital Gains Account Scheme, 1988).

5- Only ONE house property can be purchased or constructed.

6- Starting FY 2014-15 it is mandatory that this new residential property must be situated in India. The exemption shall not be available for properties bought or constructed outside India to claim this exemption.

7-If the cost of the new residential property is lower than the total sale amount, then the exemption is allowed proportionately. For the remaining amount, you can reinvest the money under Section 54EC within 6 months.
8- The property must only be bought on the name of the seller and not on anybody else's name.
9- If the builder of the new residential construction fails to hand over the property to the taxpayer within 3 years of purchase, the exemption is still allowed.

Abhishek Ranjan Singh
ARS Solutions
www.arssolutions.co.in
+919022838615
Disclaimer - Before making any decisions do consult the experts. We do not take any responsibility for misrepresentation or interpretation of act or rules. Neither we nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on.

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