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I plan to sell my house. How do I calculate the long term capital gains and save on tax?

I plan to sell my house acquired in 1984. The prevailing price is around Rs 5 crore and the circle rate would be approximately Rs 2.60 crore. How do I calculate the long term capital gains and save on tax? If I buy another house with my son or daughter as a secondary holder, can I use the entire LTCG for the new purchase?
Amit Maheshwari Partner, AKM Global replies: A sale of a house is a sale of a capital asset, and the profit will be taxed as a long-term capital gain after indexation. Since the house was purchased in 1984, you can get the fair market value of the house calculated as on 1 April 2001 which can be used for further indexation. The Income Tax Act allows taxpayers to claim certain exemptions against capital gains in such cases. Since you intend to purchase a house, u/s 54 and assuming that the house will be sold for Rs 5 crore, you will need to invest the amount of capital gains so calculated along with your son/daughter. However, your share in the new house should at least be equal to the amount of LTCG. The new residential property must be bought either one year before or two years after the sale of the old property. Further, if you are not able to buy the house before the due date of filing of tax return for the relevant year, you will need to deposit the capital gains amount in a capital gains account scheme. Further, you are not allowed to sell this house within three years of purchase otherwise the exemption shall be reversed.
I sold my house in 2019 and used the entire proceeds to buy a new house in 2020. In my tax return, I claimed the deduction under Section 54 and did not have to pay long term capital gains tax. Tax exemption was availed on Rs 55 lakh. Now I want to sell the house I bought in 2020 and buy a new house. Due to the market situation, this will be at a loss of Rs 10 lakh. Will I have to pay tax equivalent to the tax benefit that I took earlier, since I am selling within 3 years of purchase? Is there any investment I can make to avoid this tax?
Shubham Agrawal Senior Taxation Advisor, replies: If a taxpayer purchases a house and claims exemption under Section 54 and then the new residential house property is transferred within a period of 3 years from the date of acquisition, then the benefit granted under Section 54 will be withdrawn. In your case, the entire tax exemption of Rs 55 lakh will be reversed and it will be reduced from the cost of acquisition of the new house. Since you are already selling at a loss, it is advisable to complete the holding period of 3 years before this sale.

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