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Can we reinvest capital gains in a foreign country?- Property Hotline
Posted
September 1, 2016
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56
September 1, 2016
56
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4:09Now PlayingExpert: Pannkaj Ghadiali, Managing Partner at PC Ghadiali and Co LLP.
Question: I am a Brit citizen living in Kolkata since mid-2008 with valid visa. I bought a plot of land in 2006 and built a bungalow which was handed over to me in Dec 2008. Land conversion, registration, mutation etc. all is in order. I sent the funds for the purchase while I was working in London while working. The property costs Rs30 lakhs. I have been paying 10% tax bracket in India. I wish to sell this property for Rs85 lakhs. What is the tax applicable and how much? I want to purchase a 3 BHK in Kolkata for Rs50 to Rs55 lakhs. Can the profit from the bungalow sale be used to save on tax? Finally, in case I sell the property for Rs85 lakhs and wish to relocate back to the UK, can the money be transferred back to London or do I still have to pay tax, if yes then how much?
Answer: The cost of the property was 30 lakhs in December 2008 and if it is sold for 85 lakhs now, there will be a long term capital gain. In order to work out the LTCG, you need to index the cost by multiplying the cost by the index for 2016-17 and dividing it with index for 2008-09. The net amount of capital gain should be invested for purchase of new house. If this is done, there will be no further taxation. In this case you are investing between 50 to 55 lakhs so no LTCG tax payable. In the event you wish to relocate to the UK, the property can be sold after 3 years and after paying long term capital gains (if any). The money can also be repatriated to UK.
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