capital gains

Dear Pankaj, I sold a plot of land two years and one month ago.I kept the proceeds in a Fixed Deposit under Capital Gains scheme.Now I want to invest in a flat ( in a ultistoreyed complex )under construction by a renowned builder.The flat is likely to be completed within 6 months from now.The purchase will be through a third party who has only a part of the purchase value still to be paid to the builder. This remaining part payment ( about 5% )will be made by me to the builder directly and the possession of the constructed flat will be handed over to me directly by the builder.Will Capital Gains be exempted if the purchase value of the new asset exceeds the capital gains?

asked Dec 05 '11 at 16:28 by somkri 112


Hmm, i tried answering once and the reply didn't get posted. Let's see if i am lucky the second time.

If the flat is going to be registered for the first time in your name, it can be argued that it is acquisition via construction (and not purchase, which has to be done in 2 yrs). With that argument, yes, the capital gains can be offset by the cost of acquisition (including cost of brokerage, registration, stamp duty etc).

Disclaimer: I am not an expert

answered Dec 06 '11 at 10:58 by Sabarish 1

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As two years have already passed, income tax benefit won't be applicable now on a flat/house purchase.

Three years time frame is only applicable if one is getting his house constructed himself. For buying a built up house/flat, this time period is two years.

Also in case of a plot sale, section 54F applies, Under which full income tax is exempted only if buying price of new property is more than sale consideration of plot.

answered Dec 12 '11 at 19:22 by pankaj 5.2k320

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Asked: Dec 05 '11 at 16:28

Seen: 1,160 times

Last updated: Dec 12 '11 at 19:22