By now I am sure you all know what is the difference between commercial and residential property. But just to refresh your mind I will share the differences briefly and tell you can we buy commercial property after selling residential property. Check out the commercial properties on NoBroker that can yield good ROI.In simple words, residential property is the house where we live. A homeowner can construct his/her residential property as per the will. But a commercial property is constructed specifically for business purposes. It is constructed for the flourishing of the business. Some examples of commercial spaces are ATMs, banks, offices, retail shops etc. Now, let me get to the point and resolve your query: can I buy commercial property by selling residential property?
Can I purchase a commercial shop by selling residential property?
Well, you can buy a commercial property by selling your residential property. It’s totally legal to do so. But the question is will you get tax exemption after selling your residential property?Well, if you sell your residential property after a certain period of time your property will have LTCG. And for LTCG, you can avail of tax exemption under four headers:
As per section 54 of the income tax act, you can get tax exemption if you invest the LTCG in a new residential house in India.
Under section 54 EC, by investing the amount in some specified bonds.
As per section 54 GB, investing the amount in equity shares of an eligible start-up.
Therefore, you cannot avail of tax exemption if you sell your residential property and buy a commercial property. Therefore, you need to pay 20% tax on your share due to LTCG.I hope you know can we buy commercial property after selling residential property now.Read more:What is lease under transfer of property act?What is lease agreement?What is lease Deed?
The sale of residential property and purchase of commercial property is possible to save capital gain taxes. The money you receive from selling your residential property can be used for buying commercial property in India. The only catch is that you must pay income tax at a rate of 20% on capital gains determined in accordance with the provisions of income tax law.Get expert legal assistance service for property document verification from NoBrokerI hope this suffices your query, “Can I buy commercial property by selling residential property in India?”Thanks to Samay, for his detailed answer. I’d completely agree with him. Selling residential property and buying commercial property would not provide you with a tax exemption. As, if you sell your residential property after a certain period of time your property will have LTCG. And for LTCG, you can avail of tax exemption if you invest the LTCG in a new residential house in India, some specified bonds, or invest the amount in equity shares of an eligible start-up. I’d like to conclude my answer here about the sale of residential property and purchase of commercial property. I hope this helps:)Read More:How to calculate long term capital gain tax on property?How to save LTCG on commercial property?How to avoid long term capital gain tax?
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Can I buy commercial property by selling residential property?
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November 7, 2022
2022-11-07T09:10:39+00:00 2023-04-19T12:36:36+00:00Comment
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