I have the below scenario:
Sold property in October 2023. Capital Gains 60Lakhs. Will be opening Capital Gains account and deposit the gains before filing returns in September 2024.
I will be purchasing new property in 2025 calendar year first quarter approx. 2 Cr.
I have unrealized LTCG in Equity and Equity Mutual Funds.
Invested: 60L, Current Value: 1Cr.
I have unrealized gains in debt mutual funds. (more than 1 year)
Invested: 20L Current Value: 25L
Can I club section 54 and 54F, i.e. gains from property (60) and Equity and offset it against purchase of house property. I don’t have any other residential property.
Are debt fund gains eligible under section 54F?
What is the maximum amount of loan I can take to purchase the property assuming I am eligible for the loan amount? 60L will come from capital gains account. The balance can be taken as loan although I will be claiming equity LTCG (assuming we can club 54 and 54F) under section 54F?
Is this “property” a Residential house or something else?
IIUC, Section 54F (and not 54) will be applicable if it is NOT a residential house.
Isn’t this already past the deadline for filing ITR (July 2024).
So can one claim 54F exemption even if the amount was not deposited within the deadline?
Are they held long enough to qualify as long-term capital gains?
The fraction of the payment towards the purchase of the residential property that you do not intend to pay on your own (eg. using the proceeds from the sale of your previous property, equity, debt-funds) can be paid using a loan.
I have some company shares listed in Germany stock exchange. Can I claim the capital gains to offset against the purchase of the new residential property?
OK.
Please check that the holding period is sufficiently long for the specific class of securities.
IIRC, to qualify as LTCG,
(as tax-exemption is available under section 54F only on LTCG, not STCG),
the holding-period for debt mutual fund is 3 years.
Typically, to qualify as LTCG, the holding period for foreign equity is 2years.
Again please check the details for the specific securities you are holding and intend to sell.
If the shares qualify as LTCG,
then yes one can claim LTCG tax exemption under Section 54F,
by investing the proceeds from the sale of such securities
into purchasing/constructng a residential property
within the deadlines described in the Section 54F of the Income Tax Act.
Also, note that Section 54F imposes few restrictions around subsequent purchase of property, sale of the purchased property, income from property. Violating any of the restrictions results in the 54F LTCG-tax-exemption to be withdrawn, and requiring one to pay the appropriate capital-gains income tax.
