Tax: Long Term Cap Gains: Sale of Plot

Source: ET-Wealth-24Jan2011: Q&A   Q: I want to know the treatment of long-term capital gains on the sale of a residential plot that I sold recently . I intend to reinvest the proceeds in purchasing another residential plot in two years. Should I declare the capital gain in my tax returns for 2011-12 and show the exemption? Can I invest the sale proceeds in any other investment vehicle till I purchase the plot? Yes, you will have to reflect the long-term capital gains arising from the sale of plot in your I-T returns for 2011-12 . There is no tax benefit if the sale proceeds are reinvested in another plot. To claim exemption under section 54F, you have to invest the sale proceeds in a residential house. You can purchase a residential house within two years from the date of sale of the plot or a year before the date of sale of plot. You cannot claim exemption if you own more than one residential house at the time of the sale. In case you could not complete the reinvestment in the new house within the due date for filing of your I-T returns, you should park the sale proceeds in a capital-gain-savings account which can be opened in any nationalised bank