i have purchased a old house two years ago. Since repairs are mounting every day. if i sell it now. whether i have to pay capital gains now. Only to avoid LTCG, i have purchased this old house in the year 2021. j.kumar

Ans: Hi Jayakumar
I am presuming that you are referring to a house that had been acquired as reinvestment of capital gain from another earlier asset.

Considering the above, this reinvested asset (residential house) should not be sold before completion of 3 years as part of the requirements of the earlier reinvestment conditions.

If this house is sold before the term of 3 years then while calculating the long term capital gain of this property, you would need to reduce the capital gain amount (old asset) against the cost of this asset.

An example to understand this is stated below:

Cost of this house (purchased in 2021) is say Rs. 10,00,000
Capital gain reinvested from sale of earlier house is say Rs. 500,000 (i.e. you used Rs. 5 Lakhs from earlier sale)

Suppose you sold this house after holding it for 24 months (making it a long term asset but resulting in failure of the condition of section 54 w.r.t. holding the same for more than 36 months)

Sale consideration of this house is say Rs. 12,00,000

Then while calculating the LTCG of this asset you would need to reduce Rs. 5 Lakhs from the cost and thereafter find the indexed cost