LTCG from sale of house can be invested in two houses after Budget 2019-20

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With a majority of discussion revolving around tax rebate till annual income of INR 5,00,000, most people are overlooking another striking benefit that has been introduced in Budget 2019. As per the proposed plan, tax payers can now enjoy long term capital gains (LTCG) on two residential houses. Prior to this intimation, the benefit was available on only one residential house.

How will LTCG be distributed in two houses?

As per the proposed plan, an individual can sell a residential house property upto INR 2 crores and invest the same amount into two different residential houses. However, this can be done once in a lifetime.

Scenario explained with an example

Suppose Mr. Rahul has his residential property named as Gandhi Ghar that he has been holding for the past 10 years and now he wishes to sell for a value of INR 2 crs.

Then in the FY 2019-20, Rahul can invest the same into two different residential properties. The amount can be anything up to 2 crs, but not more than that.

It should also be noted that this benefit can only be availed once in a lifetime for a taxpayer.

As per the current provisions, an individual can invest the realization from LTCG from sale of house property in only one house under section 54EC.

It can be either a new ready-to-use property or constructed house.

Additionally, the time period also plays an important factor.

The purchase of house either needs to be done within 2 years from the date of sale of house or within 3 years in case the house is being constructed.

Thus, we find that the Budget 2019 has given numerous benefits to a taxpayer. If you have any questions, please let us know the same in the comment section.

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