QUERY ON LONG TERM CAPITAL GAIN

vipin 1
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I BOUGHT A FLAT IN AUGUST 2005 FOR 9 LACS. SOLD THIS FLAT IN MAY 2011 FOR 25 LACS. I HAVE ANOTHER PLOT OF LAND BOUGHT IN MAY 2009 ON WHICH I STARTED CONSTRUCTING MY OWN HOUSE FROM APRIL 2010.I HAVE ALREADY SPENT AROUND 15 LACS FROM MY SALARY ACCONT AND NOT FROM THE SALE PROCEEDS.AM I ELIGIBLE FOR LONG TERM CAPITAL GAIN RELIEF IN THIS CASE AS I HAD BOUGHT THE LAND IN 2009 ON WHICH I AM DOING THE CONSTRUCTION. THANKS &REGARDS VIPIN SINGH

construction-cost residential-flat long-term-gains section-54 income-tax

Please don't use all capital letters in future. If this happens again, your questions would be deleted.

Pankaj Batra•
2 Answers

You can still avail tax exemption under section 54 if construction of house was not over before May 2011. Construction of new house should be completed before end of three years from date of sale of old flat (May 2014).

Pankaj Batra5212

@Vipin

Exemption u/s 54 is only granted if you have purchased the new property 1 year before or 2 years after selling the old property

In case of construction, exemption u/s 54 is available only if the contruction is done within 3 years of selling the old property and not before selling the old property

And thus, Exemption wont apply in your case.

CA Karan Batra532
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