Should I pay Capital Gain Tax on the profit of 1st property ? Manoj, 06 Nov 2012

I have 2 houses. One purchased in 1992 and another in 2004. I am planning to sell the first one and invest the profit in another residential property. Can i avoid CG tax by doing so.

Fintotal Answer

Since you have kept the house for more than three years, its long term capital gain. And under section 54, you are eligible for capital gain tax. To save income tax on this long term gain, you can invest the amount again in buying another house (within a year before selling or within 2 years after selling) or construct another house within 3 years of sale or Invest in capital gains bonds within 6 months of sale (Section 54 EC of the Income Tax Act) issued by, National Highways Authority of India and National Bank of Agricultural and Rural Development. Income tax on long term capital gains is 20% with indexation

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