Capital gains tax for buying more than one home after selling the old property
If you are thinking about buying a couple of apartments after selling your dilapidated ancestral home, then be prepared to shell out a hefty sum in capital gains tax. The new Budget has capped tax breaks available to such property buyers.
This has been done through a seemingly innocuous tweak in the language of Sections 54 and 54F of the Income-Tax Act. Until this Budget, anyone selling buildings, land or other long-term assets and using the money to purchase a residential house within three years of the sale was not required to pay capital gains tax (20 %) on the sale proceeds.
But the Finance Minister has now tweaked this section to specify that only “one residential house in India” would be eligible for the tax break, instead of “a residential house”. Hence the best thing will be to buy one expensive house using the money from the sale of the previous property.
If you are wondering what the difference is between “a residential house” and “one residential house”, tax experts say it is quite substantial. This will bring a large number of hitherto exempt property transactions within the tax net.
The government wants to provide housing for all by 2022 and believes that owning one house is a necessity. However if one owns more than one, then it should be considered a luxury and hence should pay a hefty tax.
Source- The Hindu Business Line
Ancestral property, ancestral-home sales, Budget, capital gains tax, economy (general), Income Tax, Infrastructure and construction, joint development, Land price, Middle income group, Real Estate Developers, Real Estate Industry, taxation and taxes, union budget
