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Capital gain on sale of property

Laxman (Self employed) (29 Points)

15 March 2018

X has a vacant plot of 2400 sft and also owns a flat of 900 sft a different place. X wants to sell the vacant land and reinvest major portion of the sale proceeds in acquiring a flat to be constructed by Y and invest the balance in CG bond. Applying the stipulation “Assesse should not own more than one residential house prior to this investment.” whether X is entitled to avail CGT exemption on the amount to be reinvested for acquiring another flat ( Considering the fact that X owns a vacant land and also a residential flat now - when land is treated as an asset " other than residential house" 54F and excluded from 54 )

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3 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (176773 Points)
Replied 15 March 2018

" whether X is entitled to avail CGT exemption on the amount to be reinvested for acquiring another flat ( Considering the fact that X owns a vacant land and also a residential flat now "

Yes Eligible u/s. 54F

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Neha sharma (-) (1257 Points)
Replied 15 March 2018

The law says that the assessee should not own more than 1 residential house on the date of transfer of the original asset.

In the above mentioned case, the assessee only owns 1 residential house of 900 sq ft on the date of transfer of the plot and therefore, exemption under Section 54F would be allowed.

Laxman (Self employed) (29 Points)
Replied 16 March 2018

For calculating the CGT , whether indexed cost of acquisition and improvement can be applied for sale of land under 54F
If improvement can be deducted :

The plot was purchased before 1990 and what are the types of expenses allowed as cost of improvements till 2001 and after 2001? (Whether he can claim exemptions for the expenses for fencing (2 times), periodic maintenance of the plot, construction of compound wall, incidental charges , stamp duty for reinvestment in new flat etc)

Supposing, X opts to execute Settlement deeds in favour of his wife and daughter – On sale of land by the Settlees – If reinvesting in the construction project of Y is done by one of the settlees and CGT exemption claimed on the value of flat to be allotted; Whether the other settlee can also claim exemption by investing her share in the Capital Gain Bond or another flat?