In what way can I lawfully save taxes on property in two scenarios related to my flat. Scenario one, the value of my flat is 1 crore and I want to sell this and buy a new flat in Mumbai. Scenario two, I sell my flat and want to keep the money without investing it again in a property. Please suggest.


Answered on November 08, 2017
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  • Under scenario 1, if you sell your residential flat and invest the capital gain arising therefrom in another residential flat then the provisions of section 54 of Income Tax Act would apply i.e selling of one residential property and buying another residential property within the time limit specified under section 54 of the Income Tax Act will apply and capital gains so arised shall be exempted. Further the new residential flat so purchased should be held by you subsequently for period of 3 years. Under scenario 2, if you do not wish to invest in said property above, then capital gain arising on sale of residential flat can be claimed exempt to the extent of Rs. 50,00,000 if you invest Rs. 50,00,000 in bonds notified u/s. 54EC of the Income Tax Act or in unit of specified start up funds funds u/s. 54EE of the Income Tax Act as notified by the central government.
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