Sale of unregistered flat
Dear sir, I booked a under construction flat in 2011 at a total value of 20lakh upfront down payment, which I got possession letter in March 2014. Now in Oct 2017 I want to sell it at 35lakh. The flat has not been registered and I want it to sell via tripate agreement between me, purchaser and developer. Please inform if I can use cost inflation index to save Long term capital gain as the property is not yet registered . Please inform what tax implications is there and how can I save tax on the sale. This is a single property in my name.
Asked 12 months ago in Capital Gains Tax from Delhi, Delhi
LTCG shall be applicable as you had got the possession letter.
Indexation shall be applied to know the indexed cost of acquisition. Your sale proceeds less the indexed COA shall be the capital gains.
You can invest the amount in 54EC bonds within 6 months of transfer or invest in another house property within 2 years or construct withing 3 years of transfer in order to save the capital gain taxes.
Also please inform from when the cost indexation can be applied that is date of allotment letter 2011 or from date of possession letter 2014 for sale of above unregistered flat
Asked 12 months ago
The indexation for cost of acquisition shall be computed for the year of allotment. The holding period of the property shall start when it was alloted to you and hence use CII for 2011.
Yes, you can claim the indexation beneift. The date of allotment will be the date of purchase. If you have paid the amount on or before the date of allotment, you can apply indexation from he date of allotment.
Please feel free to call/ revert in case you need more clarity.
Thanks and regards
CA CS B.Com
for capital gain date of allotment in considered
Since you have received the allotment letter, you can claim the sale as long term capital gain. The inflation index will be for 2011.
You can save tax by either investing in another residential property or in NHAI or REC Bonds.
M.Com., CA, LL.B
CA, Greater Mumbai
Date of possession should be consider
This is a debatable option. The Assessing Officer will disallow your claim for indexation saying that the due amount was not entirely paid by you.
On a safer side you may only claim the indexation on the amount paid by you i.e 20 lacs, but be prepared for litigation.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP