Date of allotment vs Date of possession

I booked an apartment Bhoomi Ratna, Mumbai in 2006. I got possession in 2008. I sold the property in 2013. I booked another apartment Mantri Lithos, Bangalore in 2014. I invested capital gain amount and additional amount for it. The possession is 2018. 

My queries are -

1. When can I earliest sell Mantri Lithos, Bangalore apartment and invest the total sale amount for an permanent house for me.

2. Can I sell Mantri Lithos, Bangalore before possession and avoid paying capital gain tax. Any ways I will be investing the total sale amount for an permanent house for me.

3. Do reputed builders allow you to sell apartment before possession.

4. Is date of allotment considered for Capital Gain, or date of possession considered for Capital Gain.
Asked 11 months ago in Capital Gains Tax from Bangalore, Karnataka
Dear Sir,

Please find below answer for your quarries :

1. You should atleast hold this property for the next 3 years to ensure that the property fall into bucket of long term capital gain to reduce tax liability.

2. Yes you can surely sell the house property before possession and invest the said amount in another property within 2 years of sale of Bhoomi Ratna property to continue with capital gain benefit.

3. Yes builders do allow you to sell apartment before possession as they have transferred right of flats in your favour and now its upto you to take the call. It is depend upon your negotiation with the builders.

4. For capital gain purpose date of allotment will be of more important than date of posession.


Vishrut Rajesh Shah
CA, Ahmedabad
194 Answers
4.9 on 5.0
  Talk to Vishrut Rajesh Shah
Dear sir,

As per section 54, capital gain shall be exempt to the extent it is invested in the purchased and/ or construction  of another house. If the new asset is transferred within a periods of 3 years from the date of its acquisition , then, for the purpose of computing the capital gain on this transfer , the cost of acquisition of this hose property  shall be reduced by the amount of short term capital gain.

Ans.

1. 2021 { 3 yrs from possession)
2. Capital Gain wiil be taxable indirectly (CG amount shall be reduced from Cost of acquisition of new house)
3. depends on builders
4. date of possession will be considered in case of immovable property.

For any other query kindly contact at 
ca.skagarwal@gmail.com


 
Shiv Kumar Agarwal
CA, Delhi
197 Answers
5.0 on 5.0
  Talk to Shiv Kumar Agarwal
Dear Sir,
Please find the reply to your query based on the facts provided by you.

1. The earliest you can sell the Bangalore Property to avoid Short Term Capital Gain Tax is after the completion of 3 years from the Date of Purchase.

2. Yes you can sell the Bangalore property before possession of completion of 3 years from the Date of Purchase, but cannot avoid Capital Gain Tax. The Cost of Acquisition of Bangalore property will be reduced by the amount of Capital Gain claimed as exempt by sale of Mumbai Property. This capital gain on sale of Bangalore property will be considered as Short Term Capital Gain and taxed as per Slab Rate.

3. The builders may allow you to sell apartment before possession, depends on builder to builder. Some have a lock in period, some dont. It would be mentioned in your agreement.

4. This is a very critical question. ITO may consider date of possession for CG from the revenue point of view. But a number of High Courts have considered Date of Allotment in their judgements. So you may have to fight it out.

Feel Free to get back for any further clarifications.

Thanking You.

Regards,
CA Rohit R Sharma
BCOM, CA, LLB-GEN, FAFP.
Rohit R Sharma
CA, Mumbai
719 Answers
5.0 on 5.0
  Talk to Rohit R Sharma

Ask a Question

Get tax advice from top-rated chartered accountants. It's quick, easy, and anonymous!
Ask a question

Other Questions

Chartered Accountants

Abhishek Dugar
CA, Mumbai
773 Answers
5.0 on 5.0
Shyam Sunder Modani
CA, Hyderabad
955 Answers
4.9 on 5.0
Rohit R Sharma
CA, Mumbai
719 Answers
5.0 on 5.0
Vishakha Agarwal
CA, Bangalore
213 Answers
5.0 on 5.0
Shiv Kumar Agarwal
CA, Delhi
197 Answers
5.0 on 5.0
Lalit Bansal
CA, New Delhi
76 Answers
5.0 on 5.0
Vishrut Rajesh Shah
CA, Ahmedabad
194 Answers
4.9 on 5.0
B Vijaya Kumar
CA, Hyderabad
290 Answers
5.0 on 5.0
Ria Nagpal
CA, Ahmedabad
28 Answers
5.0 on 5.0
Bhagyashree Kankaria
CA, Pune
26 Answers
5.0 on 5.0