Hi friends,

I am planning to sell a flat which was booked during Project launch stage 5 yrs ago, stamp duty paid 3 yrs ago and is almost ready to occupy now. Need your expert opinion to clarify the income tax implication -- will the sale involve Long term capital gain or Short term ?

Some people are of the opinion that it will be short term Gains as I need to hold the flat for at least 3 yrs from date of possession to get benefit of Long term capital gains. So I would end up paying huge amount as taxes.

My goal is to pay minimum taxes since I have held on for a long time(not a speculative transaction) and also take less money in black.

Seeking opinion and advise from fellow investors

Thanks !
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  • You had purchased a "right to acquire" a property. On delivery of property this was extinguished and replaced by the property. Note you need to hold the property for 3 years to qualify as a long term asset. Refer to the link below

    http://www.livemint.com/Opinion/CczIEV9GY6gHN1k1XmygTN/Selling-underconstruction-flat-before-possession-saves-tax.ht

    This is the generally accepted view but not the only view. There have been arguments that the date starts from the date of allotment. It would be best to consult your professional advisors in case you intend to take the aggressive stand that you do not need to hold the completed property for 3 years.
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  • Thanks. Article was quite useful.

    So basically if u sell before possesion, u are selling the right to acquire a flat and holding period starts from agreement date, whereas once property is ready then holding period starts from date of possession only.

    Bottom line is If u sell before it's ready u will get lesser price but taxes will also be less. If u sell once it's ready to use, u will get higher price, but taxes will also be high if u sell before 3 yrs.
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  • Que Sera - ur right.. its a bit of a grey area... whats mentioned above was generally the accepted view, that the 3-year time is reset once someone receives the possession... however, i was recently told that some cases were awarded in favor of the timeline being counted from the time the 'Right of allotment' was acquired, and not possession...

    contactbrij - meet a professional CA or something, who really knows his stuff, who would be better able to clarify
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  • http://taxguru.in/income-tax/taxability-capital-gain-sale-construction-property-nature-gain-date-indexation-availability-benefit-section-54-54ec.html

    The other view is given above. I personally tend to agree with this author's reasoning but am unable to find any case laws supporting this view.

    Remember even ITO's have their revenue targets.. Hence I have suggested a professional who could handhold the case before a ITO if need be in case the ITO takes the conventional view.
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  • Capital Gains Tax - Mumbai

    Hi All,

    We are in the process of selling land for Amount X. It was purchased more than 10 years back for Amount Y. The property is on the name of my mother who will be 80 years this Dec. I wanted to know the calculation of how much to put in the capital gain bond to avoid the capital gains tax.

    Also can she take another property in her name in say 2 years from now which is in under construction. Till than can the amount X be in FD instead of capital gains bond?

    Since my mother is senior citizen of 80 years.. than the 5 lakhs out of amount X can be shown as income for this year and still be TDS free?

    Kindly advise.
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  • Originally Posted by prb516
    Hi All,

    We are in the process of selling land for Amount X. It was purchased more than 10 years back for Amount Y. The property is on the name of my mother who will be 80 years this Dec. I wanted to know the calculation of how much to put in the capital gain bond to avoid the capital gains tax.


    This is like telling a doctor, i have a pain somewhere in my body.. Please give me medicine. If you give vague numbers (more than 10 etc ) how do you expect answers ?

    This site may help you, but even there you have to key in exact numbers .

    http://finotax.com/income-tax/cgcalc

    Originally Posted by prb516
    can she take another property in her name in say 2 years from now which is in under construction. Till than can the amount X be in FD instead of capital gains bond?


    You have to purchase or construct a residential house within 2 years. A UC is not a residential house.

    No FD if you want to get the tax deduction. For temporary parking you need to open a capital gains account with a bank and they do allow deposits within the scheme.

    Do a little Google research..

    Originally Posted by prb516
    Since my mother is senior citizen of 80 years.. than the 5 lakhs out of amount X can be shown as income for this year and still be TDS free?

    Kindly advise.


    TDS has no relation to income. But the first x amount of income is tax free, regardless of the source.

    TDS has no relation to income. But the first x amount of income is tax free, regardless of the source.
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  • long term capital gains

    Sir

    I sold my flat in April 2015. I have booked a flat in a building which is under construction by using part of my capital gains. The possession of the flat will be given only in April 2018. Since I will not be able to invest all the capital gains before 31st july 2016 (date of filing return) I have to put the money in Capital Gains Account with Bank. My question is what is the time limit for me to invest the money lying in capital gains account. The building is under construction.
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