I am 71 years old. I purchased a second flat in 2009 @19.26 lacs. I am about to sell that flat (advance received) @43.5 lacs. With this money and some more, which I saved over the years, I am about to buy a second hand flat @48 lacs. Would you please enlighten me on the Income tax implications and oblige,

Ans: Hi,

I am presuming that you want to clarify if the capital gain tax be avoided if the reinvestment of old 1BHK flat sale could be mapped against purchase of 2 BHK flat.

The reinvestment conditions specify that you could off-set the capital gain arising out of sale of a residential property by purchasing or constructing a new house within the stipulated timeframes.

If you have bought a ready possession property (new flat) then the timelines are 1 year back or 2 years forward from the date of sale of the old flat.

If you have bought an under construction flat then the timelines are 3 years forward from the date of sale of the old property.

An example would be as follows:

Purchase of 2BHK flat is say June 1, 2022 and date of sale of 1BHK is say May 1, 2023 - You could map the capital gains from 1BHK against the purchase of 2BHK ready possession flat. Similarly, if the purchase of the 2BHK flat was at anytime after May 1, 2023 but within 2 years from this date, then again the exemption would be allowed.

In the case of under construction property, all payments made to the builder after May 1, 2023 would be allowed upto a period of 3 years

Ans: If person acquire house property in FY 2014-15 in Rs.32,50,000 and transfer it in FY 2023-24, indexed cost is likely to be Rs.47,12,500. Thus, on difference amount (65 lacs and 47.13 lacs), long term capital tax @20% will be charged. You can calculate exact tax amount through income tax calculator available at https://incometaxindia.gov.in/Pages/tools/indexed-cost-of-acquisition-or-improvement.aspx

Ans: For calculation of tax on sale of asset, date of purchase is important. Assuming it is held for more than 24 months and purchased before 23.07.2024 than tax will be charged on gain at 12.5% or 20% on gain amount after indexation (whichever is beneficial)