• Selling of investment properties

I had purchased 2 properties under construction. Both are ready and I am being asked to take possession of them. However I had brought them as investments and what to see both.
One has a bank loan of 18 lakhs and potential sale price of 80 lakhs. The buy price was 45 lakhs.
The other has a bank loan of 28 lakhs and a potential sale price of 70 lakhs. The buy price was 36 lakhs.
How will Capital gains tax be calculated if I take possession ?
Would I pay less tax if sell the properties prior to taking possession ?
Asked 2 years ago in Capital Gains Tax from Bangalore, Karnataka
Dear Sir,

For the computation of capital gain firstly it has to be determine that whether the asset is a long term capital asset or short term capital asset. 

As per section 2(42A) of income tax act 1961, “short-term capital asset” means a capital asset held by an assessee for not more than thirty-six months immediately preceding the date of its transfer.
In your case the counting of 36 months will start from the date of allotment, the date of possession is not relevant as per the judgement in case of Meena A. Hemnani, Mumbai vs Assessee on 9 January, 2014.

There will be no difference in computation of tax whether the property is sold prior or after the possession. 
Shiv Kumar Agarwal
CA, Delhi
258 Answers
58 Consultations

5.0 on 5.0

Sir first need to check when was the amount paid, less than 3 years or more than 3 years. Also if you take possession now then it will be treated as short term capital gain.
Shyam Sunder Modani
CA, Hyderabad
1408 Answers
95 Consultations

5.0 on 5.0

please share following detail
date of agreement to sell/ allotment letter of  both the flats.
Vishakha Agarwal
CA, Bangalore
435 Answers
56 Consultations

5.0 on 5.0

Please let us know when did you get the allotment letter and when did you sign the agreement with builder?
Abhishek Dugar
CA, Mumbai
2936 Answers
123 Consultations

5.0 on 5.0

Ask a Chartered Accountant

Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
  Ask a CA