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Can I Avoid LTCG Tax by Investing MF & Equity Proceeds in Real Estate?

Milind Vadjikar |1051 Answers |Ask -Follow

Insurance, Stocks, MF, PF Expert - Answered on Oct 04, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more

Asked by Anonymous - Oct 03, 2024Hindi

Money

If we redeem MF's & equities invested for long term tenure, will it attract LTCG tax if the amount is invested in real estate within 2 years of sale/ redemption.

Ans: No if the LTCG from qualified asset sale is utilised for investment in residential property within the given timeframe subject to maximum upper limit of 10 Cr as per Sec. 54F of the income tax act.

For further details you may consult a CA.

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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I learnt from a query answered in this column that LTCG from sale of mutual funds can be used for purchase of property within a given time period (under section 54) and thus tax on LTCG @10 % can be saved. My query is that , is there a capping on the tax that can be saved in this manner?

Ans: Tax on gain on sale of mutual fund can be saved by Sec 54F - invest consideration in house property (if you don't have more than 1 house property). There was no limit till FY 22 23 - which is now proposed to 10 crore from FY 23 24

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I redeemed by Equity MF's in this FY (2022-2023) after helding more than 5 years. Capital Gains is around Rs 1,50,000. My consfusion is whether entire 150,000 would be taxable under LTCG or Rs. 50,000 be taxable as there is exemption upto Rs. 1 Lakh ? Please give proper clarification.

Ans: As per the current tax laws, long-term capital gains (LTCG) from equity mutual funds are taxable at a flat rate of 10% on gains above Rs. 1 lakh in a financial year. So, in your case, since your LTCG is Rs. 1,50,000, the taxable amount would be Rs. 50,000 (i.e., Rs. 1,50,000 - Rs. 1,00,000).

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I had purchased a house in 2010 at Rs 1600000. Now I want to sell it off at Rs 4200000 in 2024. If I invest this amount in purchasing another flat costing Rs 6500000 in 2025 or 2026, will I have to pay income tax on the LTCG.

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I purchased a house in 2010 at Rs 16 lakhs. I want to sell it now in August 2024 at Rs 40 lakhs. I will reinvest the LTCG in purchasing a new house in 2025-2026 at a cost of Rs 65 lakhs. Will I get a tax exemption and in which year will I have to show the transaction (in AY 2025-26 or AY 2026-2027. Please advise.

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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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