Date of allotment vs Date of possession

Dear Sir,

Please find below answer for your quarries :

1. You should atleast hold this property for the next 3 years to ensure that the property fall into bucket of long term capital gain to reduce tax liability.

2. Yes you can surely sell the house property before possession and invest the said amount in another property within 2 years of sale of Bhoomi Ratna property to continue with capital gain benefit.

3. Yes builders do allow you to sell apartment before possession as they have transferred right of flats in your favour and now its upto you to take the call. It is depend upon your negotiation with the builders.

4. For capital gain purpose date of allotment will be of more important than date of posession.

Dear sir,

As per section 54, capital gain shall be exempt to the extent it is invested in the purchased and/ or construction of another house. If the new asset is transferred within a periods of 3 years from the date of its acquisition , then, for the purpose of computing the capital gain on this transfer , the cost of acquisition of this hose property shall be reduced by the amount of short term capital gain.

Ans.

1. 2021 { 3 yrs from possession)

2. Capital Gain wiil be taxable indirectly (CG amount shall be reduced from Cost of acquisition of new house)

3. depends on builders

4. date of possession will be considered in case of immovable property.

For any other query kindly contact at

ca.skagarwal@gmail.com

Dear Sir,

Please find the reply to your query based on the facts provided by you.

1. The earliest you can sell the Bangalore Property to avoid Short Term Capital Gain Tax is after the completion of 3 years from the Date of Purchase.

2. Yes you can sell the Bangalore property before possession of completion of 3 years from the Date of Purchase, but cannot avoid Capital Gain Tax. The Cost of Acquisition of Bangalore property will be reduced by the amount of Capital Gain claimed as exempt by sale of Mumbai Property. This capital gain on sale of Bangalore property will be considered as Short Term Capital Gain and taxed as per Slab Rate.

3. The builders may allow you to sell apartment before possession, depends on builder to builder. Some have a lock in period, some dont. It would be mentioned in your agreement.

4. This is a very critical question. ITO may consider date of possession for CG from the revenue point of view. But a number of High Courts have considered Date of Allotment in their judgements. So you may have to fight it out.

Feel Free to get back for any further clarifications.

Thanking You.

Regards,

CA Rohit R Sharma

BCOM, CA, LLB-GEN, FAFP.