AVAIBILITY OF EXEMPTION UNDER SECTION 54F

A purchase 250 SQ MTR LAND on 01/05/1986 for Rs.150000. He entered into an agreement on 27/07/2009 with developer B to construct Building on it at B's Cost and receive Rs.1100000/-. They have 50% partnership in future sale proceeds and 50% share in property remain unsold. The agreement was register at Rs.7749375/- and Rs. 97500/ paids for registry charges.The Builder construct commercial complex having Basement, ground floor, First Floor and Second Floor. Each floor consisit 11 shops and saleable area of 1705 sq.ft. 50% Basement was used as parking space and remain was left semi finished. 1 shop at ground Floor, 9 shops at First floor and 10 shops at 2 floor was sold to different buyer for Rs.11229040. Approx 1800 sq ft area was still remain unsold. My question is Whether Long term Capital Gain on sale of 20 shops can be saved, if this 1800 sqft is utilesed as resedential unit constructed by A. Whether exemption under section 54F available if A already own one resedential house.

asked Mar 11 '12 at 17:55 by vivek 1111

The exemption under section 54F is available with respect to long term capital gain on transfer of one proprty only. Here 20 separate marketable shops were sold. Even if resedential unit of 1800 sq fit alloted to land owner by the developer still exemption will be restricted to LTCG on one shop only.
(Mar 11 '12 at 18:06) vivek
Exemptions for multiple properties sale can be taken u/s 54F, but new residential property should be one only.
(Mar 13 '12 at 23:50) Pankaj Batra

As this residential unit is already part of existing property, its already in your name, there won't be any exemption available for part of same property u/s 54F.

If at the time of selling, if one own more than two residential house properties, then section 54F is not applicable.

Your case is complicated and 2009 agreement would also attract long term gains. I would advise you to consult a CA/tax professional experienced in property matters.

answered Mar 13 '12 at 23:48 by Pankaj Batra 5.2k320

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Asked: Mar 11 '12 at 17:55

Seen: 2,230 times

Last updated: Mar 13 '12 at 23:50