Long term capital gain for under construction flats

I have a long term capital gain from stock sale. If I buy an under construction flat from a builder. As per LTCG, the possession should happen within 3 years. Now if the builder delays possession and the possession doesn't happen within 3 years, is there a way out?

After 2.5 years, if I realize that possession is no where near, can I sell this and buy fully constructed flat. Or is there any other solution, if delay happens because of the builder?

Also another related question is, at the time of buying, if I already have two homes in my name, I cannot take benefit of LTCG for the third one (under-construction). Do I need to sell one of the homes before I buy the under-construction flat. Or can there be some time gap, say I can sell the home in 1 year of buying the under-construction home.

asked Jan 20 '12 at 05:55 by amardeep 1111


There is no exemption provided if builder delays possession of house. Moreover, if you are getting a flat and not constructing house yourself, time available is only two years from sale date and not three years as you are assuming.

If 2.5 years have already passed, you have no solution now. Tax benefit now can only be taken if you buy a plot and construct house before three years end.

Section 54F would apply for tax benefit here as gains have arisen from sale of stocks. Under this section, if one is already owning two residential house properties in his/her name at the time of selling asset, no tax benefit is applicable.

answered Jan 23 '12 at 15:33 by pankaj 5.2k320

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Asked: Jan 20 '12 at 05:55

Seen: 1,666 times

Last updated: Jan 23 '12 at 15:33