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Can i sell house and purchase commercial property -tax issue

Sam Singh (Others) (163 Points)

21 November 2015

Guys I had sold my old house and want to purchase commercial property(Office) in gurgaon. From selling house I got 20L white cheque payment.... Now If i use this 20L for commercial property(Office) then there is no issue ?

Please Help what to do ? Someone told me I can't purchase commercial property(Office) with house selling profit ? I need to pay tax for it

What you think?

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11 Replies

ROUNAK AGARWAL (SMAP ENGINEERING PVT LTD.) (289 Points)
Replied 21 November 2015

As per my opinion it is not possible to claim exemption from capital gain on inv. in commercial property

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S. Shiroor (Others) (1207 Points)
Replied 21 November 2015

You should purchase a residential property where commercial activities are allowed.

I suppose 20L is the capital gains. you should invest in NHAI/REC bonds or new house. Untill then the money should be kept in Capital gains Accounts in in any nationalised bank.

Sam Singh (Others) (163 Points)
Replied 21 November 2015

Originally posted by : S. Shiroor
	You should purchase a residential property where commercial activities are allowed. I suppose 20L is the capital gains. you should invest in NHAI/REC bonds or new house. Untill then the money should be kept in Capital gains Accounts in in any nationalised bank.

Thanks a lot for replying. What if I want to purchase commercial property ? with minimum tax paying ? How much tax is on commercial property

Can you tell me about What is Capital gains Accounts ? Right now Money is in Private bank Saving account.

eiba giri (student) (31 Points)
Replied 21 November 2015

Capital gain account means that account open for deposit the money from selling of capital assets until u havent invest for another purpose which save gain tax.

Sam Singh (Others) (163 Points)
Replied 21 November 2015

Thanks, But I deposited in my personal saving account. Is there any issue ?

What if I want to purchase commercial property ? with minimum tax paying ? How much tax is on commercial property

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(Guest)

U are liable to pay the cap gains...only benefit u have is indexation... There is no exemption where u can set off the ltcg with the new business office purchase

S. Shiroor (Others) (1207 Points)
Replied 22 November 2015

Go to your bank (Nationalized) . ask for a capital gains saving account form - fill it - transfer the sale proceeds of old House in that. Remember if your indexed cost of purcahse is X and you sold for Y including brokerage. Then only (X-Y) need to be put in this account. If you dont deposit in CGSA then I think there is some penalty. You need to prove to AO if inquiry/scrutiny comes that the capital gains exemption was proper. If you buy commerical property there is no exemption in capital gains - 20% of 20 lakhs viz 4 lakhs you haave to pay capital gains tax.

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Kamal Vyas (Article Assistant) (61 Points)
Replied 22 November 2015

Exemption u/s 54 or u/s 54EC is possible if u invest ur consideration in another one residential property or Bonds of NHAI/ REC respectively.... In ur case if u want to acquire commercial property then u have to pay capital gain taxes on profits from sale of house property(subject to indexation).... Rate of taxes would be 20% but limited to 10% without indexation.....

Shivam gupta (student) (263 Points)
Replied 22 November 2015

You can purchase a commercial property from the proceeds of sale of your old house. There is nothing to worry about. Only thing is, you have to pay income tax @ 20% on capital gain calculated as per the manner provided in income tax law.

Prachi Bansal (3129 Points)
Replied 06 April 2021

Originally posted by : Shivam gupta
	You can purchase a commercial property from the proceeds of sale of your old house. There is nothing to worry about. Only thing is, you have to pay income tax @ 20% on capital gain calculated as per the manner provided in income tax law.

Can you please explain it in detail?

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Ray Jain (2 Points)
Replied 31 January 2022

Hi... Reference this discussion chain; I have a question too. If I sell a residencial property, but buy a modern-day residencial suite (basically, a service apartment for personal living purpose) built along with a Mall, then do I still need to pay Capital Gain Tax on the entire amount?