Can I Use My Capital Loss from Office Block Investment Against LTCG Next Year?

Ans: In respect of capital gains you can claim exemption from long term capital gains if the net sale consideration is invested in booking an under construction house. You get an extended period of three years to get possession in case it is booked with a developer.

In case the sale consideration is not fully invested in the residential house before filing of the Income Tax Return, the unutilised money has to be deposited with a bank under Capital Gains Account Scheme. The money deposited can be utilised within the prescribed period for payment of house.

You have to keep in mind that to claim this exemption, you should not own more than one residential house property on the date of sale of the shares except the one in respect of which you are claiming the exemption.

So once you claim exemption in FY 22 23, it is not advisable to claim exemption against gain earned in subsequent years.

In Income Tax Return, you can show the amount invested in property as exemption u/s 54F and if the entire 10 lakh consideration can not be invested in property then open CG account and show amount in ITR accordingly.

Ans: In the absence of exact dates, i will not be able to check calculation. Please cross check your indexed cost from income tax calculator available at https://incometaxindia.gov.in/Pages/tools/indexed-cost-of-acquisition-or-improvement.aspx.

Also your wife is required to show said transaction if at the time of acquisition of property she contributed.

Further, long term loss under the head capital gain from sale of house property can be set off against long term gain under the head income from capital gain subject to conditions

Ans: Yes, seems correct treatment done. You can go ahead with submitting your returns respectively.

Please note that Long term losses can only be set off against long term gains, if that's the case then you can.

Please consult your CA before moving ahead.

Ans: Understanding Your Capital Gains Scenario
You invested Rs. 93.5 lakhs in a commercial property in 2017. This property was jointly owned with your wife. The total cost, including expenses, was Rs. 1.09 crores. You sold the property in 2024 for Rs. 1.1 crore. This transaction resulted in a loss of Rs. 31.24 lakh, split equally between you and your wife.

Filing ITR2 with Capital Losses
The income tax system calculated a capital loss of Rs. 15.62 lakh for each of you. This loss has been set off against your long-term capital gains from other share transactions. The remaining loss can be carried forward.

Submit ITR2: Yes, you can finalize and submit ITR2 as shown. The system's calculation is correct.
Carry Forward and Set-Off of Capital Losses
The Income Tax Act allows you to carry forward capital losses for eight years. These losses can be set off against future capital gains.

Using Carried Forward Losses: Yes, you can use the carried forward losses to set off against future capital gains from share market transactions. This helps in reducing your taxable income in future years.
Analytical Insights
Loss Set-Off: By setting off the loss against your other gains, you reduce your tax liability for the current year. This is a strategic move.

Carry Forward Benefit: Carrying forward losses provides a cushion for future gains. It helps in managing tax liabilities efficiently.

Key Considerations
Record Keeping: Ensure you maintain all documents related to the sale and purchase of the property. This includes agreements, receipts, and tax filings. These documents are crucial for future reference and any tax scrutiny.

Tax Planning: Consider consulting a Certified Financial Planner for comprehensive tax planning. They can help optimize your investments and tax liabilities.

Future Investment Strategy
Diversification: Diversify your investments to balance risk and return. Consider mutual funds, bonds, and fixed deposits.

Risk Management: Assess the risk of each investment. Balance high-risk investments with safer options to protect your capital.

Final Insights
Managing capital gains and losses is crucial for effective tax planning. You have used the tax provisions wisely by setting off the losses against other gains. Carrying forward the remaining losses will help reduce your future tax liabilities.

By diversifying your investments and consulting with a Certified Financial Planner, you can optimize your financial portfolio for better returns and risk management.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in