Want To Sell A House? Know These Tax Changes


BANGALORE: Recently, the Finance Minister Arun Jaitley has presented a new union budget 2014 that will be applied in the year 2015-16 and the subsequent years. He has proposed some changes in the income tax laws related to real estate and his agenda for making changes is to provide housing for all in the imminent years.

Let us have a look on some of the amendments in Income Tax laws

Capital Gain discharge on residential property:

The present provision contained in section 54EC of the Income-tax Act provides that the new residential house property purchased or constructed is not transferred within a period of three years from the date of purchase.

Any long term Capital Gain arising to an individual or HUF (Hindu undivided family) from the sale of a house or land shall be exempt to an extent. Such Capital Gain is invested in the purchase of another residential property within a time period of one year before or two years after the due date of transfer of the property sold. The construction of such residential house property has to be done within a period of three years from the date of attainment.

Now in the new amendment that will be applied in the year 2015-16 and subsequent years, the investment for getting Capital Gains benefit should be made in one residential property located in India, not out of the country.

Investment in bonds for availing long-term Capital Gains freedom:

According to the law, under the section 54EC provided for investment, in one financial year investment should not to exceed 50 lakh. Those tax payers for whom the Capital Gains arose after September of a particular financial year, they were able to make 50 lakhs investment in the Capital Gain Bonds in the same financial year. In the earlier start of the next financial year they were able to further invest 50 lakhs thereby the total of 1 crore could be invested by them in Capital Gain Bonds for tax saving. 

However, the new amendment states that in the investment made by a tax payer in the long term specified asset that is the Capital Gain Bonds, the maximum assumption that can be availed is 50 lakhs in one financial year.  In that the original assets are transferred and separate assumption cannot be claimed in the subsequent financial year.

Advance received for sale of property:

According to the new amendment in section 56 of the Income-tax act, if any sum of money received as advance for the transfer of capital asset is given and the negotiations do not result in the sale of the asset, the money will be treated as income from other sources.