East Bay Business Daily

how to avoid capital gain tax while selling a land and buying house?

My wife has a land in Orissa. We are planning to sell that land and purchase an apartment in Karnataka. The apartment price is more than the proceedings from the sale of land. Hence I am planning to take loan for the additional amount. My wife is unemployed. How we can avoid paying Capital Gain Tax and how I can get the tax exemption on home loan?

Public Comments

1. This is possible as per IT regulation. Best is to seek help from your IT Lawyer who will advise you and this has to done during IT Return. Both properties should be in the same name.
2. The W-2 should show anything paid to you during the calendar year (January 1 through December 31), not necessarily when it was earned, but when it was paid or accounted for. But you cannot necessarily go by the last check stub of the year if there are perks that are accounted for at the end of the year, like company paid life insurance beyond what the government allows as deductible, etc. I am glad I waited for my W-2 instead of filing too early based on check stubs (actually direct deposit stubs), or I would have had to amend.
3. You do not avoid paying Capital Gain Tax, but you can save the same. Long Term Capital Gain from the Transfer of a Capital Asset other than Residential House Property, invested in Residential House (Section 54F): The exemption is available only to an individual or a HUF who transfers (or sells) a capital asset that results in a long-term capital gain, and then invests the amount of gain in acquiring a new residential house. This exemption is available subject to fulfillment of the following requirements: (i) The transferor assessee should purchase a residential house in India within a period of one year before or two years from the date of transfer or construct a residential house within three years from the date of the transfer of the original house. (Construction must be completed within these 3 years.), and (ii) The new house property purchased or constructed has not been transferred within a period of three years from the date of purchase or construction.
4. Mr. HMT answer is my answer. Land means agricultural land ??. In case if it is a agricultural land then there is not tax on it. Agricultural land is exempt from capital gains. The conditions are given below. Read it in the website. http://www.taxworry.com/2007/01/agriculture-land-sale-is-tax-free-but.html
5. The other time when the average person might want to avoid capital gains taxes would be at the sale of a piece of real estate. If a property increases in value from the time it was bought until the time it was sold, that sale is subject to capital gains taxes, but tax loopholes exist in these situations as well. One well known loophole is called a 1031 exchange, or Starker Trust exchange. In this type of exchange, an investor sells a property, then buys another which is worth more, within a certain time frame. If this is done correctly, the investor can avoid capital gains taxes on that transaction for the time being.