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Capital gain reinvestment on construction a house on a plot that was bought earlier.

Q: Dear Members,

I've bought a plot in May 2010 and currently building a house on it. I'm planning to sell another plot that I bought in 2006 to fund the building cost.

Can I claim capital gain exemption if I invest in constructing the house that I bought in 2010 based on the sale proceed from this year 2013? I've already taken bank loan for construction and planning to use the sales proceed to prepay the loan amount.

Thanks
Senthil
Reply

Replies (1)
1
There are two types of accounts in the Capital Gain Account Scheme provision. The first account is just like a savings deposit account. You can withdraw from the account from time to time subject to other conditions of the scheme. This account is suitable for people who are planning to construct a house over a period of time. The amount withdrawn should be used for the purpose of purchase or construction of a house. It should be used for the purpose within 60 days of the withdrawal. Any unused amount should be deposited back in the same account.
Rakesh


2

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