LTCG :: Timing & Calculation

qualitex 1
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I have sold my flat & profit from it will be LTCG . I booked two Under Construction Flats ( by paying 10% amount ) 15 months before sale of my old flat . I hv paid another 40% in 12 months prior to sale of my old flat & will be paying another 30% before filing income tax return on 31st July 2012 . Now My question is will 40 + 30 = 70% will be taken as reinvestment from LTCG . I donot want to open LTCG A/c & wish to pay Tax on left over money ( Profit from sale of old flat -- 70% amount paid to builder ) x 2 flats.

Need Expert advise if my above calculation is correct...

under-construction long-term-gains section-54 capital-gains ltcg income-tax
1 Answers

As you sold a residential flat, you may avail income tax benefit under section 54.

As per section 54, you can buy another residential property within one year before sale of old flat or within two years after sale of flat.

As you have already bought another property, you may claim exemption. But it can only be availed against a single property and not on two. To save income tax fully, new property price must be more than long term gains earned.

You may need to open capital gain scheme account if possession/registration of new property is done by income tax return filing. Registration and possession of new flat must be done within two year of old flat sale.

Pankaj Batra5212

Thanks but I am confused as before .

Some CA's are saying that for reinvestment in underconstruction property , investment has to be made after sale of old flat . Also it can be done only in one flat .

I also want clarification if it is date of booking of flat or date of making payment which is counted for under construction property ( one year before or 3 year after sale of old flat ) as in my case booking is made one year before sale of old flat & possession can be after 3 year of sale of old flat & I will claim LTCG only for payment made to builder within 1 year of sale of old flat till filing of return on 31st july , 2012 .

please help.

qualitex•

Investment has to be done in one flat only. Long term gains can be used to pay amount for property purchased within one year before sale of old property or two years after sale. In case your new property's possession/registration lies in this period of three years, you may be able to claim tax benefits. There won't be any tax benefit if possession of new flat is taken after three years of sale. There is no benefit on just payment to builder or booking of flat.

Pankaj Batra•
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