LONG-TERM CAPITAL GAINS TAX AND THE IMPACT ON INVESTING IN MULTIPLE HOUSES

With new and affordable properties coming up in the market like that of Sumadhura Eden Garden Project by Sumadhura builders, prospective purchasers are more than willing to invest in more than a single property, however, can investment be made on multiple houses for Long Term Capital Gains is the question.

As per Indian duty laws, an assessee is qualified for guarantee exclusion on long term capital gains tax, marked down of a property or some other resource, if s/he buys a private house. Be that as it may, there are a couple of hazy areas in this exception.

An inquiry that emerges, is whether the assessee can put resources in excess of one residential house and claim capital gains exemption under Section 54 or 54F.  Tax payers could assert long-term capital gains tax exemption by putting resources into in excess of one house property. Be that as it may, a change was made to the income tax laws, which supplanted 'a residential house' with 'one residential house', with impact from April 1, 2015.

CAN INVESTMENT BE MADE ON MULTIPLE HOUSES FOR LONG TERM CAPITAL GAINS

It can be sensibly induced that even after the change of Section 54 and 54F, accommodating exception from long-term capital gains tax, just if the speculation is made in one residential house property, one can in any case put resources into in excess of one house and claim the tax exclusion, given the  taxpayer can demonstrate that every single such flats are utilized as a solitary private unit by the family.

On the off chance that the assessee has acquired in excess of one private house and the houses are in various areas, at that point, the assessee could claim exemption only in respect of one house.. Be that as it may, the taxpayer would be qualified for exclusion in excess of one unit, if the two neighboring or persistent units are changed over into one residential house, and the two units are expected to be utilized as a solitary house for the family's home.

LIMITATIONS

Long Term Capital Gains from sale of real estate pulls in tax of 20.6%, with indexation. In any case, segment 54 of the Income-Tax Act, 1961, gives that long term capital gains tax can be spared by reinvesting in a private property, and as amended by the Finance Act, 2014—reinvested in one private unit. The new house must be purchased either 1 year before the exchange of the older property or 2 years after the exchange. In the event that you wish to build a house, it ought to occur within 3 years of exchange of the older property. Keep in mind, it is required to keep the sale proceeds  in a different record under the Capital Gain Account Scheme (CGAS) in the event that you intend to purchase a property later—however not following 2 years have terminated. Regardless of whether you are building a house, the cash ought to be kept in CGAS to avail the tax benefit. Withdrawals can be for development, and no other reason.

The new house must be in India and ought to be the main residential property you possess. In addition, on the off chance that you purchase another new house or build one (other than the new one), within a time of 2 years or 3 years, respectively, from selling the older house, you lose the tax cut. The new house can be sold just 3 years after it is purchased or built.