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Selling 3 Flats for 30 Lakhs: Can I Buy a 48 Lakh House Using Capital Gains and Profit?

T S Khurana |402 Answers |Ask -Follow

Tax Expert - Answered on Mar 05, 2025

A certified management accountant since 1993, T S Khurana is a fellow member of The Institute of Cost Accountants of India. His areas of expertise are income tax, specifically litigation cases, and GST.

Since the last 21 years, he has also been providing expert advice on financial matters, including investments and diversification of funds, and wealth building in the long term to his clients.
He believes that investment in real estate is the safest way for better returns and wealth generation over a period of time.

A former chairman of the Chandigarh Chapter of Institute of Cost Accountants of India, T S Khurana has also served as member of its technical committee.... more

Question by Raj on Mar 05, 2025Hindi

Money

Sir if I follow new rule that my 2 lac property sold @ 30 lac....mean flat 28 lac profit from sale of 3 individual flat, And also I have ka capital gain account amount Rs 20 lac.... Can a buy a residential house for Rs 48 lac And above And club my 28 lac profit + 20 lac capital gain account in that property... As my father has No other property

Ans: As stated above, if your LTCG is Rs.28.00 lakhs & you Invest Rs.48.00 lakhs in Purchase of Residential house, with in 2 years from the date of Sale of property, there would be no LTCG.
Most welcome for any further clarifications. Thanks.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Asked by Anonymous - Jul 20, 2023Hindi

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Hellow Sir, In February, 2023 I had sold a House Property and there is Capital Gain around 15.00 lakh. From the sale proceed I received, I have already bought a housing plot(land) costing Rs.11.00 Lakh, in May, 2023, in a Govt. approved scheme and this has also been registered in my favour. All other formalities for its mutation has also been completed. Since I am planning to construct house on this newly acquired Plot in next 2 years, kindly guide:- (1)whether the amount already incurred in acquiring above Housing Plot would also be considered against utilization of Capital Gain ? (2)the amount I have to kept in the Capital Gain Account Scheme for utilization during construction of House shall be Rs.15.00 Lakh OR Rs.4.00 Lakh (after deducting cost of Plot i.e. Rs.11.00 Lakh) ? Kindly Guide Regards !

Ans: Hello,

I understand your situation and I'm here to help. Based on the details you've provided and the current tax laws in India, here's what you need to know:

1) The amount you've spent on acquiring the housing plot can indeed be considered for the utilization of your capital gain. As per the Income Tax Act, if you reinvest the capital gains from the sale of a property in buying a new property or constructing a new house, you can claim tax exemption on the capital gains.

2) The amount you need to keep in the Capital Gain Account Scheme (CGAS) would be the remaining amount after deducting the cost of the plot from the capital gain. In your case, if you've already spent Rs. 11.00 Lakh on the plot, you would need to keep Rs. 4.00 Lakh (Rs. 15.00 Lakh - Rs. 11.00 Lakh) in the CGAS. This amount should be utilized for the construction of the house within the specified time period, which is 3 years from the date of sale of the original property.

T S Khurana |402 Answers |Ask -Follow

Tax Expert - Answered on Mar 06, 2025

Question by Raj - Mar 05, 2025Hindi

Money

Sir I am asking that father already opened capital gain account for rs 20 lac last year.... Now he has 3 flat left to sell, if he sell all three flat to 3 different person, means 3 registry will made.. In this 3 flat we will get approxy 10 lac capital gain in each flat.. Means 30 lac.. So can I buy 1 residential flat for 30lac( sold 3 flat) + 20 lac (will break capital gain account) total 50 lac.... Kya mai sare gain ko 1 flat purcahse mai laga sakta hun to save all tax

Ans: 01. The basic question is from which source amount of Rs.20.00 lakh has come, which was deposited in Capital Gain Account ?
02. Yes. You can sell multiple flats & purchase one residential house property. You would be eligible for exemption u/s 54.
Most welcome for any further clarifications. Thanks.

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Question by Raj - Mar 05, 2025Hindi

Money

Hi sir/madam I wanna ask that i have already a capital gain account for rs 30 lac Whose 2 years going to complete in feb 2026 Now i have just 2 flat left- ist floor, 2nd floor with tarace Now 3 different- different person want to buy ist, 2nd and terace, means 3 registry will made, now approxy it will generate 10 lac per floor capital gain after indexation... Meqns total 30 lac So this 30 lac+ capital gain account 30 lac.. A total of 60 lac can i invest in 1 residentiql flat... Is it possible that i will invest in one flat against sale of 3 flat + capiral gain account amount... Thanks

Ans: Yes, you can invest the total Rs 60 lakh in a single residential flat to claim capital gains exemption under Section 54 of the Income Tax Act. However, there are a few conditions you must follow:

Key Conditions for Claiming Exemption
The new property must be a residential house. It should not be commercial or under construction beyond the allowed timeline.

The investment should be within the allowed time frame. You must buy the new flat within 2 years from the date of sale or construct it within 3 years.

You can use the amount from multiple sales. Even if you sell different floors of your property to different buyers, you can reinvest the total capital gain in one residential flat.

The capital gains account balance should be used within the allowed period. You must invest the Rs 30 lakh in the new house before February 2026. Otherwise, it will become taxable.

Important Considerations
If the new property costs less than Rs 60 lakh, the unused capital gain will be taxed.

The exemption applies only to long-term capital gains. If any portion of your gain is short-term, it will not qualify for exemption.

You must not sell the new property for at least 3 years. If you sell it before 3 years, the exemption will be reversed, and you must pay tax on the gains.

Final Insights
Yes, you can invest Rs 60 lakh in one flat and claim exemption under Section 54.

Ensure that you buy the new property within 2 years or construct it within 3 years.

Keep proper documentation for all transactions to avoid issues with the tax department.

If you need more clarity, consult a tax expert before making the final investment.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

T S Khurana |402 Answers |Ask -Follow

Tax Expert - Answered on Mar 12, 2025

Question by Raj - Mar 09, 2025Hindi

Money

Sell of 3 flat in next FY will generate 30 lac capital gain + 20 lac already in capital gain account So can I use all 50 lac to purchase 50 lac residential house?

Ans: Yes. You can purchase a Flat Costing Rs.50.00 (L) & avail exemption u/s 54, PROVIDED your purchase of new flat of Rs.50.00 (L) is within 2 years from the date of Sale of all sold flats.
Most welcome for any further clarifications. Thanks.

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Ans: Dear Anonymous,
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Dear Sir, I am 52 now, I have accumulated 19L in SIP of Rs.42000 p/m, 14L in PPF. I have withdrawn Rs. 12L from EPF for investing in a property of 45 L with a bank loan of 35 L which would invite an EMI of 32000 for next 18yrs. Due to this I might have to stop some SIPs (around 25000/0) in the first year to manage the first year EMI. However, I plan to increase the SIP by Rs. 6000 year after year. My present flat if sold off might fetch me around 25L if in need. If rented, I would get around 10000 p/m. I think of keeping both the flats. My daughter is doing her B.Sc right now, this is for info. My question, if the decision for purchase of new flat have been wise? At end of my pvt. co. service after 8 yrs. should I pay off the total principal at once or try to continue the EMI for next 10 yrs.? What do you think my financial condition be at time of retirement? Thank you. Kindly respond.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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