Capital Gains on Real Estate Property Sale
Selling a residential house, commercial plot, or land held for more than 24 months results in Long-Term Capital Gains (LTCG). Without strategic planning, substantial tax liability is incurred on the net gain.
1. Section 54: Reinvestment in New Residential House
- Eligibility: Applies to Individuals and HUFs selling a residential house property.
- Reinvestment Window: Purchase a new residential house 1 year before or 2 years after the sale date, or construct a new house within 3 years.
- Exemption: Entire capital gain is exempt if fully reinvested (capped at ₹10 Crores).
- Capital Gains Account Scheme (CGAS): If the funds are not reinvested before the ITR filing due date (31st July), deposit the unutilized capital gain amount into a designated CGAS account in a nationalized bank.
2. Section 54EC: Capital Gain Bonds (NHAI / REC)
- Eligibility: Available on LTCG from any land or building.
- Investment Limit: Up to ₹50 Lakhs per financial year.
- Eligible Bonds: 5-year lock-in bonds issued by NHAI, REC, PFC, or IRFC.
- Time Limit: Must be invested within 6 months from the property sale date.