Tax Implication on Sale of Under Construction Property

POSTED BY Amit Gupta ON September 20, 2012 8:35 pm ONE COMMENT

Hi,

I need advise/clarification on tax implication on sale of under construction flat. I booked in flat on 7th July 10 for which allotment letter was issued on 10th Sept 10 for 35L. 

The property is still under constrcution and not expected to be ready for possesion till Dec13. 

If I sell the flat today at 55L, would I be able to take benefit of Capital Tax provisions. I intend to invest this in buying a new flat for 55L or more.

regards,

Amit 

One reply on this article “Tax Implication on Sale of Under Construction Property”

  1. Dear Amit, as your rights on property (ownership) has not completed 3Y period, the gains from the sell of this under construction property ‘ll be considered Short Term Capital Gains. As the Gain amount in this case is 20L Rs. you w’d have to pay 30% Tax on this STCG amount of 20L Rs.

    No you can’t save STCG tax liability by investing either in Capital Gains saving bonds or in another property. Your best shot ‘ll be to sell the flat after Sept 2013 to avoid any future problem. Alternatively, if you can manage some STCL in this FY till 31st march 2013, then you can sell this property now.

    Thanks

    Ashal

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