Long term capital gain on property

Dear Sir,

No you can't buy a under construction flat before selling your flat. Under construction flat can only be bought within three years from the date of sale of old house.

But ready flat can be purchase before 1 year from the date of sale of old house or within 2 years from the date of sale of house.

No there is no cap in holding flats under section 54. But there is cap in 54F.

So you can use 54

Please feel free to call/revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Hi,

There is no cap on number of flats u/s 54. Since both your existing properties are residential houses, you are covered u/s 54.

The condition for purchasing one year before the sale is for Purchasing a house and not constructing a house.

However, the words used in Section 54 is "within three years, constructed one residential house in India".

So, in my opinion, you can still claim Section 54 benefit if you invest the Capital Gain amount from the sale of any one existing House provided the construction is complete within 3 years and you do not buy or construct any other house within 3 years.

It seems the query is addressed to other experts.

Hi,

I believe as you have received the allotment letter in 2012, it will be considered as date of acquisition of the residential house.

But your case can fall under section 54 & 54F, where To claim the exemption, one must invest the proceeds derived from the sale of the house property into another residential house either within two years from the date of the sale or one year prior to sale, or one must invest in the construction of a new house within three years of the sale.

So you CAN INVEST in the construction of a new house within three years of sale.

PURCHASE 1 YEAR BEFORE IS NOT APPLICABLE IN YOUR CASE.

here is the case law for your reference

https://www.pwc.in/assets/pdfs/news-alert-tax/2014/pwc-news-alert-16-december-2014-jyoti-arun-kothari.pdf

you can also go through this site for capital gain under section 54, it is written in layman language.

http://wealth18.com/how-to-save-capital-gains-tax-on-sale-of-property-in-india/

Hello Sir,

You can very well adjust the Capital gain against your under construction property. You may sell the property either within 2 years before registering your new property or within 1 year after you register your property.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

For residential unit there are no such restrictions.