How to save capital gain tax on account of property sold today purchased 29 years back. I am working woman?

What is time frame to save capital gain tax either by way of deposit in bank or bonds. Upto which period sale proceeds have to be reinvested in housing. What is the best option. My husband who is retired already owns a house where in v r living.

4 Replies to “How to save capital gain tax on account of property sold today purchased 29 years back. I am working woman?”

  1. Managing a capital gains tax liability can be quite a handful for assessees. The conventional method of dealing with such a liability is to simply invest in capital gains bonds. At Personalfn, we believe there is more than one way of doing this.

    However, before discussing the various alternatives, let us understand what a capital gains liability is and how it arises.

    If you sell any capital asset (like a house property), a capital gains tax liability can arise on the same. If the asset (property in this case) has been sold within 36 months from the date of purchase, it amounts to short-term capital gains. Conversely, if the asset is held for a period of more than 36 months, a long-term capital gain arises.

    In case of assets like mutual funds, the holding criterion for determining long-term or short-term is reduced to 12 months. So if you hold the security for over 12 months, it qualifies for a long-term gain.

    The following illustration explains how a capital gains are computed.

    How to save capital gain tax on account of propert –

  2. Section 54 – Long-term capital gains on sale of residential house invested in purchase/ construction of another residential house (subject to certain conditions and limits).

    Section 54EC – Capital gains on transfer of long-term capital assets invested in specified assets (bonds).

    From 1.4.2006, investment can be made only in notified bonds of NHAI and REC.

    Section 54F – Capital gains on transfer of long-term capital asset other than residential house, invested in residential house, subject to certain conditions.

    New house should be purchased within 1 year or constructed within 3 years.

    You can open a Capital Gains Account Scheme in banks where it is available.
    Deposit your capital gains in this account. You have to utilize this amount within 2 years for purchasing a house or within 3 years for constructing a house from the date of sale.
    If this deposit is utilized for the specified purpose within the specified period then no advance tax is required to be paid on the gains.
    The deposit in the CGAS has to be made by the investor before the last date of filing his ITR for the relevant year.

    In case you do not wish to invest the gains in property, then the first day of paying advance tax is 15th of September.

  3. Answers recd by you so far are confusing. It is better to consult a tax consultant or C.A. Was the purchased property in your name or hubby’s name? what was the purchasing cost. What improvements made, what is the indexation cost. What is the sale price. There are so many questions need to be answered, otherwise it will result in wrong workings.
    Bonds as suggested above is better option but nobody can purchase bonds of more than 50 lakhs. (If you purchase more, only 50 lakhs will be allowable deduction.
    Depositing in Capital Gains tax Savings account is temporary facility, for time being.
    You can surely purchase one more house though your hubby owns one more house (assuming the current property being discussed in in your name)

  4. If the property was purchased 29 years back, it means the year 1980. If that be so, you have excellent chance of seving tax.

    Get a valuers report regarding market price of your property as on 1/4/1981 .

    Do indexation on that Market Value.

    Deduct it from Sale price.

    Whatever will be the balance , shall be Long Term Gains taxable @ 20 %.

    This you can save if you purchase another residential house of that LTCG value.

    If you invest in any capital bond approved for section 54EC, even then you can save.

    Read follwing article and others on the issue referred here

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