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Vivek (Manager)     04 October 2016

Duration for under construction flat to save ltcg

Hi,

 

I've sold a property on Dec'14 and re-invested the money in under construction FLAT (by builder) in Jan'15. Can anyone please confirm the time by which I should get possession of the flat to save LTCG on the property sold in Dec'14? Will it be 2 years or 3 years. Please note it's under construction FLAT by a builder and not a residential plot. 

 

Regards,

Vivek



Learning

 6 Replies

adv.bharat @ PUNE (Lawyer)     04 October 2016

Vivek no body will guess when u got the possession.

To save ur taxation u need to invest in under construction flat.

If u appreciate my answer then will u give THANKS on my profile on LCI.

Vivek (Manager)     05 October 2016

Thanks for your Response Bharat.

Probably I didn't phrase my question properly. I've reinvested the money in an underconstruction flat only. My question is willI I be liable to pay tax on CLTG if I do not get the possesion within 2 years from the sale date of my first flat ?

 

And, surely, you deserve a Thanks for responding :)

Regards,

Vinkal

Ms.Usha Kapoor (CEO)     08 October 2016

Thesooner  say  6 months he completes construction of the flat  and hands it over to you with  occupancy certificate your holding period of  your newly acquired property;s 3 years period for Long Term Capital Gain starts from that Date. Tell the builder to make the construction fast and complete it at the  earliest so that you can  get possession o fproperty and your period of 3 years  commences from  the date he gives you Occupancy ceertificate and you get complletion certificate. After 3 year holding period i fyou again want to sell the  property  you can save the LTCG Tax by saving  in Section 54 such as investing in  another house fo rself occupation or investing the sale  proceeds in capital Gains Scheme of any pubic  sector Bank or in Bonds under Section 54 C..  you should get the possession of your immovable property in order along with occupncy  certificate from the builder and completion certificate from th e local  Municipal corporation..Inh  order to save on Long Term Capital Gain tax you need to invest in Section 54  and 54 C.If you appreciate this answer please click the thank you button on thi sforum.

Ms.Usha Kapoor (CEO)     08 October 2016

Another thing you  note is that  Long Term Capital Gain savings would be AVAILABLE only in  respect of residential house property. They are not available fo rcommercial property. Your date OF 3 YEARS begins ffrom date of  allotment letter by the  builder  on which date title of the property get  transferred to your name.I came across th efollowing information online. Please read that"

The Exemption from Long Term Capital Gain is available only for Residential Property of Individual or HUF:

Recently, i received a query wherein one of the reader sold the residential property and bought commercial property. He claimed an exemption for long term capital gain from the sale of residential property against commercial property. Subsequently, he received notice from income tax department and has to deposit capital gain tax with a penalty. As a thumb rule, both the properties i.e. property sold and the property bought to save capital gain tax should be residential. Any other combination is not allowed. Residential property includes residential farm house. A common query from uber rich in Delhi :). 

If you appreciate this  answer please click the thank you button on this forum.

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Ms.Usha Kapoor (CEO)     08 October 2016

Another thing you  note is that  Long Term Capital Gain savings would be AVAILABLE only in  respect of residential house property. They are not available fo rcommercial property. Your date OF 3 YEARS begins ffrom date of  allotment letter by the  builder  on which date title of the property get  transferred to your name.I came across th efollowing information online. Please read that"

The Exemption from Long Term Capital Gain is available only for Residential Property of Individual or HUF:

Recently, i received a query wherein one of the reader sold the residential property and bought commercial property. He claimed an exemption for long term capital gain from the sale of residential property against commercial property. Subsequently, he received notice from income tax department and has to deposit capital gain tax with a penalty. As a thumb rule, both the properties i.e. property sold and the property bought to save capital gain tax should be residential. Any other combination is not allowed. Residential property includes residential farm house. A common query from uber rich in Delhi :). 

If you appreciate this  answer please click the thank you button on this forum.

balas (Chartered)     25 October 2016

Hello Mr. Vivek,

I understand from your query, you are  buying an flat (not self construction undertaken). In this case scenario,  my  view is :

a.  You should purchase  a residential house within the period of  two years after the date of the transfer of the original asset.

b.  It is also held in several cases that Investment in the new residential property is good enough to claim tax exemption. Occupancy / occupancy certificate is not a mandatory requirement to fulfill the period of two years stated in point a above. Hence if you are unable to occupy due to non-possession within 2 year period window, it does not mean you are not entitled to tax exemption as you have sufficient proof to prove that you have invested in the property.

c. Thirdly, delay in delivery of possesion by the builder does not in any way penalise the tax assessee from claiming tax exemption as is held in several tax cases.

Hope this meets your requirement.

Tnx

Balaji Srini FCA., LL.B.

 

 

 

 


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