Sale/Purchase of property

Sale/Purchase of property

I sold my residential site at Bangalore on May 2014 and invested partly in purchase of apartment in Bangalore and partly in CG Bonds. Sale agreement was executed with the builder and 90% payments have been made. Property will be handed over and registered in July 2016. For personal reasons I am planning to assign this property to a prospective buyer before registration and buy a ready flat on resale in Chennai from the assignment proceeds. What are the CG tax implications ?

Asked 8 years ago in Capital Gains Tax

Dear Sir,

Firstly, I am assuming you have taken the capital gain exception in the year 2014. If not, please let us know.

The implications are as under:

1. If you want to assign the constructed property to some other person , the sale if this property will attract short term capital gain.

2. Further,you have to buy the new flat in Chennai before May 2016. Otherwise, you amount exmpetion taken in 2014 will become taxable.

Please let me know if you have further questions.

Thanks and Regards,

CA Abhishek Dugar

Abhishek Dugar

CA, Mumbai

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Dear Sir,

It appears that in order to save up on Long Term Capital gain, you have invested the proceeds partly in underconstruction property and partly in CG Bonds.

Now as per the act, you can claim the exemption if you buy a new house property within 2 years or construct within 3 years from the date of sale.

Since you are planning to buy a ready to move in property, you should make sure that you buy the property within 2 years from the date of sale of your earlier property which will be ending in May'16.

In case of sale of your under construction property, you will be required to pay Short Term Capital Gain Tax.

Trust this clarifies your query.

Feel free to get back/ call back for any further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB - GEN, CERT. FAFP