Timing for utilising long term capital gains tax from sale of flat

It would be treated as construction of the property and the period of 3 years would be applicable. Construction can be started before the transfer of the existing property but it should be completed within 3 years from the date of transfer.

1.As the construction would be completed on Aug 2022. 3 years back means Aug 19. You should start searching for a buyer of the existing property.

2. Yes

3. Construction of property

4. Many case laws are in favour of assessee.

5. Allotment date i.e. Jan 2020

6. No

7. No problem

Dear Sir,

Hope you are doing well !!

In case of construction, the new residential property must be constructed within 3 years after the sale of the property to get exemption u/s 54.

1.Now, you should start searching the buyer.

2. Yes.

3.Construction of property.

4.Depends on genuine reasons as decided in many case laws.

5.Allotment date

6. No.

7. Yes, you can go ahead. There is no problem in it.

Hello,

1. You will have 3 years time period to get the new property constructed from the date of sale of the old house property. Since construction is going to complete in Aug. 2022, you can sell the existing property any time from now.

2. Yes.

3. Would be regarded as the construction of the property. 3 Years time period would be available.

4. Exemption u/s. 54 cannot be denied merely because the construction is not complete in all respects and possession cannot be taken.

5. Agreement date of allotment date, whichever is earlier.

6. No.

7. You can go ahead with the same.

I hope that this answer satisfies your requirements.

Regards,

CA Hunny Badlani

Hello Sir,

1.Under section 54, you can avoid tax on capital gains from the sale of a house property if you reinvest the money to buy another property. You can claim tax exemptions under this section if you buy the new property one year before the sale or two years after the sale.

In case it is under construction, the new property should be ready within three years of the old property’s sale.

So, you can sell the old property on or before Aug 2022.

2. Yes.

3. It would be treated as construction of property.

4.Yes, you can still claim LTCG exemption under section 54 for payments made against purchase of under construction flat as decided in many case laws.

5.It should be from allotment date i.e. Jan 2020.

6.No.

7. No problem.

You must try to sell in 2020 to get maximum benefit because you will get possession in Aug 2022 and it may extend further 3-5 months so you must have some room for extension as you get 3 years for new construction.

You can do it now but It would be better if you do it after sale agreement of current.

Under construction flat would be covered under category of construction of property as mentioned above.

No you need to get possession within 3 years or else you will have to pay capital gain in that year.

As per law its date when you receive possession or sale deed is registered but if you make any payment before that then agreement date is considered.

No.

It would be better if you purchase it after sale of current flat.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

We still dont have Inflation rate of next year i.e. FY 2020-21 in which you are planning to sell flat but as per current rate your capital gain would be around 1.02 crore.

We can fight for all amounts but its subject to litigation

LTCG would be approx. Rs. 1.02 Cr.

All three amounts can be claimed.

Hi

1. You can sell the old property anytime before the final payment for the new property. However it is advisable to sell it before Dec 20.

2. Yes

3. It would be construction- 3 years limit shall apply.

4. Construction should be completed within 3 years of sale of old property.

5. The allotment letter date is considered relevant.

6. No

1. 1.04 cr

2. All

3.yes but construction should be completed before Nov.2023

1. It would be approx 1.05 crores

2.

• A yes
• B yes
• C yes

3. Yes, provided the construction gets completed within 3 years of sale of old property.

1. The capital gain amount would be ~Rs. 1.05 Cr.

2.Yes.

3.Yes, provided the construction must be completed within 3 years of old property transfer.

It is based on basis judicial pronouncements on similar lines. You may refer to ACIT vs. Vineet Kumar Kapila.

Please check the judgement correctly. In this case,

Application for booking of flat 27th August, 2010

Buyer's Apartment-Agreement 2nd December, 2010

Sale of Flat 11th November, 2011

Completion of the flat by the builder August, 2014

Handing over the possession of the flat 28th August, 2014

And the exemption is granted.

The law is vague in this aspect as it says that you can purchase a flat before 1 year of sale and construction should complete within 3 years of sale and they haven't made it clear in law that when should the construction of such flat start to claim exemption. So there is a grey area and which can attract litigation thats why i had suggested to enter into agreement after sale as it would be more safe.

- Law says construction should be completed within three years from the date of transfer. Construction can start before the transfer.Law does not say that the payments for the construction should be made after the date of transfer which is not practical.

You can avail tax benefit on payment made in Jan 2020 for new under construction flat which is earlier than sale date but subject to litigation.