Should I pay capital gain tax on sale of a land and purchase of new home Chang, 06 Nov 2012

We had a family plot bought in 1975 and we sold it in 2010 march for 50 lacs and constructed a new home for 38 lacs. The old plot was in my dad name and the newly built house is in my mother's name. Can you please tell in detail about the capital gain tax we should pay and can it be avoided by any chance?

Fintotal Answer

You can have long term capital gains tax exemption under section 54 F  on the amount of capital gains (Rs 12 lacs) your new house if you are the buyer of property and also seller of plot. Assuming you inherited your father's plot, even if the new property is not in your name if you can show that you paid for it you can claim exemption. Also you cannot claim exmption under section 54 F if you owned other residential property during the time of sale or buy residential property within 1 year of sale or construct house within 3 years of sale.

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