• Tax implications with respect to property sale

Hi,

We bought an Apartment in 2009 in Bangalore & Got a provisional Allotment letter around that time.
We got possession of the property in 2016 and we are yet to Register the Flat.
Builder has asked us to first Register the flat in our name and only then we can sell it.
If we register in Apr 2017, and then sell it, will we qualify for Long term or Short term Capital gain and hence the tax liabilities arising out of it? Will our Date of Allotment (in 2009) or date of Registration (in 2017) be considered while ascertaining whether we qualify for Short term or long term Capital gain.

Also - if we qualify for Long term Capital gain, where our Purchase Price would be around 50 L and Sale price is 80 L, what will be the Tax liability ? When will we have to pay this tax and how can we save tax ?

Regards
Meetu
Asked 7 years ago in Income Tax

Dear Meetu,

Generally date of allotment letter is considered as date of purchase of property. There are many judicial precedents in support of this. I am assuming you have paid some money before or at the time of receiving allotment letter.

Accordingly, it will be a long term gain.

Further, with respect to the maoumt of capital gain, we cannot tell you the exact amount as capital gain inflation index is yet to be published for FY 2017-18.

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

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Please find below answers :

a) Date of acquisition for capital gain shall be date of possession which shall be date of allotment only

b) Sir cost of interior will not be allowed as deduction. If your selling now than new index shall be applicable and old index shall have no relevance. Hence not possible to derive at accurate capital gain.

Vishrut Rajesh Shah
CA, Ahmedabad
928 Answers
38 Consultations

5.0 on 5.0

First of all there are contradictory views on the same in Income tax. But we submit the same as per our view

No as per the wordings you got possession in 2016. So you will not qualify for LTCG. It is treated as Short term .

In this case you can add the interest if any paid on housing loans taken for purchase of the property with the cost of Rs. 50 Lakhs and the remaining will be your short term profit.

For more details need to see the Provisional Allotment letter. But provisional allotment letter is only for alloting / blocking the property in your name.

Shyam Sunder Modani
CA, Hyderabad
1408 Answers
164 Consultations

5.0 on 5.0

Hello Sir/ Madam,

The transaction is covered under Long Term Capital Gain.

Many Assessing Officers give you the indexation benefit only after you receive the Occupation Certificate, so that is subject to litigation.

Regards

Keerthiga Padmanabhan

M.Com., CA, LLB

Keerthiga Padmanabhan
CA, Greater Mumbai
784 Answers
27 Consultations

5.0 on 5.0

Hello Sir,

1. You can very well claim it as a Long Term Capital Gain.

2. You will have to fight it out to claim indexation benefit as many AO disallow the claim, but yes you can avail the same in an appeal.

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

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

I think the query seems to be addressed to another expert.

B Vijaya Kumar
CA, Hyderabad
1001 Answers
124 Consultations

5.0 on 5.0

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