I sold my flat on 8th Aug 2017 and made LTCG of 50 Lacs. Now I am planning to buy an under construction flat in resale.Kindly advise whether the new property to be purchased should be a brand new to be purchased directly from a builder or is a resale flat (currently allotted to some other person) is also allowed for taking income tax benefits under section 54 on LTCG? I understand that by 31st July, either i will have to make the payment of 50 Lacs to the owner of the flat or i need to deposit the amount in CGAS. Is it correct? Since this is a 2nd hand under construction property, do i need to get the builder transfer completed by 31st July 2018 for getting tax benefit under section 54. Or it would be ok if i make the payment of 50 Lacs to current allottee before 31st July 2018 and i can get the builder transfer of property completed after 31st July 2018. Do i need to deduct TDS of 1 % from sale value in this case also.
Hi
Yes, section 54 exemption shall be available.
Only payment made upto 31st July shall be enough to claim exemption. Receive a letter of allotment from the builder before 31st July 2018.
Construction of property should be completed by 7th August 2020.
Yes, TDS shall have to be deducted @1% if total consideration exceeds Rs. 50 lakhs.
Hi,
Hi,
Yes your understanding is correct. You have either have to invest the amount within 2 years from sale of old property in new constructed property or within 3 years in under construction property. 3 years are given for construction period.
Since these period can well go beyond the due date of filing the tax return for the FY 2017-18 of July 31 st 2018, you will be advised to deposiy the capital gain amount in capital gain account scheme to save capital gain tax to secure more time if you remain
undecided.
New property means new for you. It does not matter that it is owned by some other person or is second hand. That is immaterial. You can pirchase the under construction or already constructed or allotted property from allottee, it does not matter however in order to take exemption, you must have the possession of property within the prescribed time limit ,(within 2 years or 3 years as the case may be)
Possession completes the transfer of the property as per transfer of property act. In case of allottee, you must get the the builder certificate before July 31 to take the exemption in this year.
Thanks
Damini
It can be Resale property also.
To claim the expemtion ,house to be constructed within 3 years from date of sale of old property.
It is to be deposited in CGAS before due date of return fillingi.e. 31st july ,if not invested in property.
it guess it would be ok if payment done to current allottee.
TDS is to be deducted when property value is more than 50 lacs.
Hi,
Yes, you can take exemption u/s 54.
Making the payment of 50 lakhs by 31st July should suffice to claim exemption.
Construction of property should be completed within 3 years from the date of sale i.e. 7th August 2020.
You will need to deduct TDS @1% if total consideration exceeds Rs. 50 lakhs.
Hope this clarifies.
Regards,
Nikhil.
Dear Sir,
1) TDS @1% needs to be deducted when sale consideration exceeds Rs.50 lacs and not capital gain. As in your case LTCG is Rs.50 lacs so definitely sale consideration would exceeds Rs.50 lacs.
2) To save tax, it is required to invest in property whether it is resale or new property.
3) You sols flat on 08.08.2017 so you need to purchase within 2 years of the date of transfer or construct within 3 years of date of transfer.
4) Either purchase the property upto the date of filing of ITR i.e. 31.07.2018 or deposit it in CGAS and utilize the amount accordingly.
Thanks
Hi,
Yes, you buy a property from some other person as well to claim exemption u/s 54.
If you are making the payment of 50 lakhs by 31st July or return filing date whichever is earlier, then you don't need to deposit the amount in cgds scheme.
Construction of property should be completed by 7th August 2020.
You will need to deduct TDS @1% if total purchase price of new flat exceeds Rs. 50 lakhs.
