Capital Gains Tax on Property

My mother, aged 76, a bonafide cancer patient and currently bed ridden, has sold a residential property.

In what time frame, another ready built property can be purchased, so as to avoid taxes?

Further, in case of her unfortunate demise, without investing in another property, what will be the consequences? Can my Father then make this investment, within this time frame?

What are other options? more  

View all 7 comments Below 7 comments
What happens to NRI card Holder??. When & How can he/she sell the house if he/she wants to take all the money into foriegn currency. Is it possible?? or He/She needs to pay CGT???. Please answer. more  
Income tax rules for NRIs are similar to that for Residents. She will need to pay tax @20% Or purchase property Or invest in specified capital gain bonds. NRIs are not exempted from payment of tax on capital gains.. more  
I thought One can deposit all the amout from Sale of House into number of specified ,Taxfree Bonds or into Capital Gains Tax Exemption Trust Account in the Nationalised Banks for 3 years & then you can withdraw without any Income Tax......Is that right????? .Please answer. more  
The ready built house is required to be purchased within two years of Sale of the property or deposit the amount of capital gain in the capital gain bonds of companies notified by the government in this regard.. The legal heirs can neither purchase new property nor capital gain bonds to save payment of income tax as there is no such express provision in the Income Tax Act. So it is very important to Consult an experienced Tax consultant in this regard. more  
Sorry to hear about your mother's illness. May God give her strength to recover. Now, coming to the legal issue, attention is invited to section 54 of Income tax Act which provides that if capital gains arising from transfer of residential house is used to purchased another residential building either one year before or two years after date of sale, or constructed within three years of sale, then the capital gains arising is exempt to the extent of amount of capital gains do used. Pending utilisation, you have to deposit the amount of capital gains in a capital gains account with a bank before the due date of filing return . You can withdraw money from this account and appropriate it towards new property within time permitted in this behalf. In the unfortunate event of demise of your mother prior to acquisition of house , in my opinion, the legal heir/ successor/ representative can buy the house and claim deduction because section 259 of the Act provides that where a person dies the legal representative shall be liable to pay tax in the same manner and extent as the deceased person. The necessary implication of this is that even the LR is subject to the same rigours as the deceased then he ought to get all the exemptions as would be available to the deceased . Another option to avoid tax is investing in binds under section 54EC. more  
Thanks a lot for the information, dexterously explained. more  
a. The law is that if you want to reinvest in the entire capital gain in a residential property, you have to do so in ready built house either before 1 year or after 2 yours of sale of old house or if you want to construct a new house, you have to do it within 3 years from the sale of old property.
But if you do not invest in above, before the due date of filing of your IT return, you have to deposit the entire amount in a Capital gain Deposit scheme in any Nationalized Bank without fail.
You had another option of investing in specified bonds upto Rs.50.00 lakhs out of your capital gain and the rest you can invest in property or pay tax.

b. In case of demise of your mother, if entire capital gain amount is deposited in Capital gain scheme by her before death can be withdrawn by her legal heirs without payment of any Tax as the liability for non investment of proceeds in a residential house ceases on her death more  
Post a Comment

Related Posts

    • Query on PMAY

      Hi All, I have bought a new flat in Bangalore with my mother as a co-owner. She is a homemaker and do not have any property registered in her name. When i was applying for Home loan initially ...

      By Anonymous Circle member
    • the decisions of Supreme courts Our top court in India

      As we all know in our India Supreme court is supreme of all courts and it is safe guarding our consitution and to provisions provided to the citizens of India. But in recent past days the Supreme C...

      By VIJAY VK
    • Correction in my Khatauni

      I inherited a house constructed in 1968 by my late father in my name in main city and yellow card is issued by Nagar Nigam. House Tax and Water tax are being paid regularly . I wanted to sell my ...

    • Legal Heir Certificate

      Would like to know about Legal Heir Certificate. I am told that it is to be obtained after the demise of one's parent. Won't it be better if the Parent can declare his legal heir whil...

      By Chandrasekhar K
    • Advise for land locked agriculture land

      My 11 bigha land was occupied in 1982 by Government of UP for constructing PAC compound at Barabanki .Now my land is land locked and there is no approach to main road. Being a Senior citizen ,may I...

    • Date of birth difference between primary and secondary school due to clerical mistake

      my date of birth in matric certificate issued by the board is May 1962 which I surrender at the time of joining job as per this my retirement is in May 2020 but it come to my notice few days back ...

      By Anonymous Circle member
    • legal hairs are liable to pay damage for civil suit of their parents?

      Sir, is there any law under IPC which says that legal hair have to pay to the respondending party if their parent expires during the course of legal suit? my mother filed a civil suit against ...

      By Iqbal Singh
    • GST for flat booked before April 2019

      I have booked a flat under construction in Hyderabad in June 2018 with a promise it would be delivered by Sep 18. But the builder got OC only in April 2019. Out of 45 flats to this date only 16 ha...

      By Anonymous Circle member
    • Why does government of India want to put cookies on our computers????????

      I tried to visit and access a particular SRO but could not because a pop up always came up whenever I tried to access "S...

      By Anil Kumar Singh
    • Dispute in Residential Project..Confusion on Suggested Solution

      Reframed last post to make it more clear. This post have better details of dispute and solution : a) Residential Project spread on PlotA, PlotB registered as Phase1 A/B/C buildings ...

      By Naresh Yadav
    • Request your help and wealth of knowledge on Legal Matters

      I filed a SLP in the year 2015 before the Hon'ble Supreme Court of India against at Criminal Petition which was against me. The SLP was filed by me online as party in person. I was infor...

      By Anil Kumar Singh
Enter your email & mobile number and we will send you the instructions

Note - The email can sometime gets delivered to the spam folder, so the instruction will be send to your mobile as well

Please select a Circle that you want people to invite to.
Invite to
(Maximum 500 email ids allowed.)