Capital gains arising out of selling a flat

I want to sell my flat purchased in 1993 and would like use the proceeds for buying another flat.The cost of the flat was 5 laksh plus registration of 26000. This flat is expected to fetch Rs 55 lakhs .I would like to purchase a new flat for about 90 lakhs nine months from now.I also have booked a flat jointly with my wife in Jan 2011 and the UDS was registered in June 2011 and this flat is expected to be handed over in one year from now.I do not have any other residential house or flat in my name.

Under the circumstances please tell me whether I can avail capital gain exemption while purchasing the new flat using the sale proceeds when I have already booked for another one for which I will fund from our personal sources and loan.

asked Dec 09 '12 at 09:48 by Jothi 6117


As property being sold is a residential house property, section 54 would be applicable. Under this section, there is no condition of how many properties one person may have.

So you can avail tax benefit against new purchase as well as property purchased in Jan 2011. In order to save tax fully, your share in new residential property should be more than long term gains earned from old flat sale.

If you want to claim tax benefit against Jan 2011 flat, possession for it should be received within time frame of one year before sale and two year after sale.

answered Dec 09 '12 at 23:52 by Pankaj Batra 5.2k320

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Thank you for your reply.From your reply I understand that the date of possession is only relevant and not date of registration of UDS or date of booking of new property.Hope my understanding is right.
(Dec 10 '12 at 18:54) Jothi
Date of possession would be relevant here.
(Dec 11 '12 at 10:42) Pankaj Batra
Hi Pankaj I have one more query.I do have a plot of land in my name purchased in Sep 2008.If I am unable to sell my flat I am thinking of selling the plot (purchased for 12 lakhs) which may fetch 40 lakhs to purchase a new flat for 90 lakhs.If I do this I will have my old flat and the UDS registry of the flat booked in Jan 2011 in my names.Does this mean I have two properties at the time of selling the lot of land? Can I claim capital gain exemption on the new flat to be purchased?
(Dec 15 '12 at 22:05) Jothi
If at the time of sale of land you already have two residential properties in your name registrated(single or joint owned) then section 54F won't be applicable for tax benefit.
(Dec 17 '12 at 01:44) Pankaj Batra
Thank you for your reply. Summary of my understanding on the subject is given below In the case of residential flat or house one can have any number of houses or flats in his name and at the time of selling one such property he can avail capital gain tax exemption for buying another flat/house . The date of booking or UDS registration are not relevant and only date of possession is relevant for the computation of period before sale and after sale. If a person wants to sell a plot of land and buy a flat or house he cannot claim tax exemption if he owns more than one flat/house.Howevever if he has only one flat or house at the time of selling the land he is eligible for claiminhg capita gain tax exemption. Pl confirm that my undstanding is right.
(Dec 21 '12 at 19:11) Jothi
Yes, it looks fine.
(Dec 22 '12 at 14:18) Pankaj Batra
Hi Pankaj When the sale deed is registered is it ok to get the payment through bankers cheque from a nationalised bank? Is it ok to deposit the same in a savings bank account held in the sellers name? Thanks in advance
(Jan 10 '13 at 22:08) Jothi
I don't see any issue in it.
(Jan 11 '13 at 17:28) Pankaj Batra
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Asked: Dec 09 '12 at 09:48

Seen: 2,933 times

Last updated: Jan 11 '13 at 17:28