Long Term Capital Gain Tax - Residential property - Under Construction Flat

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Hi,

I have recently booked an under-construction flat in a residential project in Bangalore (the agreements with builder to sell and construct have been made in March 2012; builder has given me the allotment letter; and it is expected to get completed in 3 years).

I also have a flat in Hyderabad (taken possession in october-2008) and it is on rent. I am planning to sell this Hyderabad-flat, and planning to use the money for paying installments of under-construction flat in Bangalore.

Can you please let me know:-

a) Can I get exemption of LTCG tax in this case (if the new under-construction flat is booked before selling the old residential flat)?

b) For the purpose of LTCG tax exemption, what will be considered as the date of purchase of new under-construction flat? (Will it be the date of agreements to sell & construct OR will it be the date of allotment letter of under-construction flat OR will it be date on which Sale deed will be registered after three years upon completion of flat)

c) What is the time range during which I can sell-off my hyderabad flat (to get the LTCG tax exemption)

Regards, Amit

1 Answers
  1. If possession for new flat is received within two years from date of sale, you can get tax benefit u/s 54.
  2. For LTCG tax exemption, possession date of new flat is used.
  3. You should sell Hyderabad flat within two years before possession of new flat.
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