Capital gains when property is sold by the landowner before completion

Since he has sold the flats before getting the occupancy certificate he has sold his rights in the land and it will attract capital gain i.e. sale value received less fair value ofof sha of land sold.

When he receive his share of flat it will also attract capital gain and you won't be able to claim any exemption u/s 54F since he owns a flat so he needs to pay full tax.

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Thank you

Hi,

- In Income tax, condition is to receive completion certificate. There is a difference between completion and occupancy certificate. If you have sold both the flats before receiving the completion certificate then section 50C would be applicable, according to which full value of consideration would be stamp duty value of the house. If Rs.70 lacs is less than stamp duty value then it might attract scrutiny by the department and may refer to the internal valuer for valuation.

- Cost of acquisition is governed by the section 49, according to which you have to consider notional cost of acquisition i.e. stamp duty value of the two flats.

Thanks

Dear Sir,

Hope you are doing well !!

Capital gain at the time of sale of any of the flat will be calculated by deducting stamp duty value of the flat from actual sale consideration.

Land owner has to pay capital gain tax both the times (I.e. at the time of receipt of completion certificate and at the time of sale of that flat.

Hello,

Since the landowner has transferred his share in the project before the date of issue of the completion certificate, Sec. 50C would be applicable and the full value of consideration would be deemed to be the stamp duty value on the date of handing over or the actual consideration, whichever is higher.

Regards,

CA Hunny Badlani