Can I invest capital gains amount to a currently under construction apartment booked 2 years ago?

Dear Sir,

Can you please let us know what kind of property you have sold?

Residential house property or other than Residential house property?

Hi

For date of purchase, use the date of allotment. If you don't have the letter of allotment, you'll have no option but to use registration date.

No. You need to invest in a new property. The before period is only 1 year; that too for purchase and not under construction property.

Hi,

- It should be date of allotment for the ownership of the property and to calculate whether gain is short-term or long-term. If date of allotment is not available,consider date of registration and calculate the gain accordingly.

- Construction of the house may start before the transfer but it should be completed after the date of transfer of the original house and within the stipulated time i.e. 3 years. You can go through the case law for more details (CIT V J.R. Subramanya Bhat).

Thanks

Dear Sir,

The starting date for the holding period also continues to be a matter of litigation because of different rulings from high courts and Income Tax (I-T) tribunals. The most common view, however, is that the date of allotment should be considered for determining the holding period rather than the date of possession. If you dont have allotment letter, take date of registration to calculate capital gain

For availing tax benefits - You must buy new property within 2 years of the transfer of old property. If you are constructing a new house, the exemption is relaxed for one more year i. e. 3 years.

You can also buy a new property before one year of the transfer of old property.

Thanks & Regards,

Payal Chhajed

Dear Sir,

Thank you for your kind feedback.

Thanks & Regards,

Payal Chhajed

Hi,

To your first question , you should consider the date of allotment as the date of purchase. If that is not available you have no option but to consider the date of registration as the date for computation of capital gains.

On your second question, you need to buy a residential property within 2 years or construct a new property within 3 years of the date of sale. Even buying a property within one year before the date of sale shall be eligible for deduction. Since the new property has been booked by you in 2016 and it is under construction, you will not be able to take the benefit of capital gains tax exemption. You will need to buy a new property or invest in Specified Capital gains Bonds to get tax exemption.

Hope that clarifies.

Regards,

Nikhil

Hi,

As per various judgements and clarification issue by the income tax department, the date that should be considered for computing capital gains shall be the date on which the builder/developer issues alloment letter.

Hence it is recommended to obtain the date of allotment as provided by the builder in both the cases i.e. for the first property and the second property.

If the allotment is done prior to 3 years for the first property then only you can claim exemption.

For the second property,if the allotment is still not made you can claim the exemption u/s 54 to the extent of capital gain or amount invested whichever is lower.

Hope this resolves your queries.

Hi

1. Ideally, you need to use the date of allotment. If there are no documents in relation to allotment, you will have to use the date of registration. Even if the registry mentions the date of allotment, it would suffice the requirement.

2. No. You cannot claim section 54 exemption as the property purchased is beyond the time limit prescribed.

Dear Sir,

1. You will have to use the date of allotment for holding period calculation. If you dont have allotment letter, then use date of registration.

2. No. Now, you can not take the benefit of section 54 exemption as the property purchased is beyond the time limit prescribed.