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Home / Money / Personal Finance /  Income tax calculator: Selling gold for house purchase? Know these 3 useful info
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Income tax calculator: Buying a home is one of the important financial decisions of an earning individual. Sometimes, an individual sell out some other important assets like stocks, gold, mutual funds etc. to buy home. However, on booking profit or selling an asset attracts income tax in the form of long term capital gain (LTCG) tax. However, income tax department allows LTCG tax exemption in certain conditions. For example, if a homebuyer sells out gold to buy a new house or construction of a new house property.

Speaking on income tax rules involved in gold sell, Pankaj Mathpal, MD & CEO at Optima Money Managers said, "If a person sells gold after holding it for 3 years or more, then in that condition gold seller will have to pay 20 per cent LTCG tax with indexation. However, if the gold seller uses entire proceeds received for buying a new house or construct a new residential property, then in that case the gold seller can claim exemption on LTCG tax."

However, Pankaj Mathpal said that the LTCG tax exemption on gold sell can be claimed only when the new house is purchased within 2 years of gold sell and a new residential property is constructed from the within 3 years of gold sell.

On how to avoid LTCG tax on gold sell, Archit Gupta, Founder & CEO at Clear listed these three important information:

1] You must buy a new residential property one year before the sale of the capital asset; or

2] You must purchase residential property within two years from the sale date of the capital asset; or

3] You must build/construct a residential property within three years from the sale date of the capital asset.

Under Section 54F of the Income Tax Act, one can claim income tax exemption on net wealth gained from the sale of capital assets such as stocks, bonds, gold etc., but other than a house property. However, the claim can be possible if the whole money received from the gold sale is used for buying of a new residential property.

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