Ltcg related: selling an old property to invest in a new one.

If you can buy the new house within 2 years or construct it within 3 years from the date of the sale, then Sec.54 will be applicable.

yeah. That is pretty straightforward. My question is something else. I am investing that amount in a new property right away but construction completes in 4 years time which is beyond my control.

When you are making such a huge investment in purchase / construction of a property you will have to adhere to the rules /conditions imposed after pooling up requisite resources.

Prima facie no legal dispute is involved in the facts vis-a-vis query.

Originally posted by : Dr. J C Vashista
	When you are making such a huge investment in purchase / construction of a property you will have to adhere to the rules /conditions imposed after pooling up requisite resources. Prima facie no legal dispute is involved in the facts vis-a-vis query.

Not a legal dispute sir, I want to buy this property during launch when prices are competitive but the construction timeline is 4 years. If I invest in a property that is already nearing completion, I end up paying atleast 40% more than a launch rate. In a bid to save 12.5% of LTCG, I end up paying higher for the new property.

When you book an under-construction flat, it is legally treated as the construction of a house. This grants your father a 3-year window from the date of selling the old property to deploy the capital gains toward the construction.

Since the Bangalore project will run until 2030 (exceeding the immediate 3-year window for full disbursement), your father cannot keep the unutilized capital gains sitting in a regular savings or current account. Before filing his Income Tax Return (ITR) for the financial year in which the old property was sold, any capital gains not yet paid to the builder must be deposited into a Capital Gains Account Scheme (CGAS) account with a nationalized bank.

As the builder raises construction milestones and issues demand letters over the next few years, your father can withdraw money from the CGAS account and pay the builder directly. Ensure that within 3 years of selling the native property, the entire capital gains amount is either paid to the builder or safely locked into the CGAS account.

Originally posted by : T. Kalaiselvan, Advocate
	When you book an under-construction flat, it is legally treated as the construction of a house. This grants your father a 3-year window from the date of selling the old property to deploy the capital gains toward the construction. Since the Bangalore project will run until 2030 (exceeding the immediate 3-year window for full disbursement), your father cannot keep the unutilized capital gains sitting in a regular savings or current account. Before filing his Income Tax Return (ITR) for the financial year in which the old property was sold, any capital gains not yet paid to the builder must be deposited into a Capital Gains Account Scheme (CGAS) account with a nationalized bank. As the builder raises construction milestones and issues demand letters over the next few years, your father can withdraw money from the CGAS account and pay the builder directly. Ensure that within 3 years of selling the native property, the entire capital gains amount is either paid to the builder or safely locked into the CGAS account.

Thank you sir, so it's about ensuring the capital gain amount is disbursed within 3 years duration and need not necessarily mean property registration is also completed by then 🙏🏻

Your understanding is right.  You can consult a CA in case you need further clarification in this regard.

Originally posted by : T. Kalaiselvan, Advocate
	Your understanding is right.  You can consult a CA in case you need further clarification in this regard.

Thank you once again sir.