Long Term Capital Gains

[Ramesh M]

I will get a Long Term Capital Gain of around 1 Crore on selling property A now.

 

I booked an under-construction property B on April 2012. Agreement value is just above 1Crore. Construction started on June 2012. Registration was done on June 2014. Construction is almost over now. I’m yet to get the keys and possession letter. I have made 90% payment.

 

As per my understanding, according to Section 54, to claim exemption from Long Term Capital Gain Tax,

1. A new residential property must be purchased either 1 year before the sale or within 2 years after the sale of the property/asset.
2. Or the new residential house property must be constructed within 3 years of sale of the property/asset

Can I claim exemption from sale of property A, if I sell it now and get possession of property B in the next two months?

 

Please advise.

 

Regards,

Ramesh

[DR.MARIAPPAN GOVINDARAJAN]

Whether my presumption is correct? You are in possession of property A which is going to be sold by you. You want to claim exemptions from capital gains tax by getting the possession of property which has been booked prior to the sales of A?

AI Summary

Long Term Capital Gain exemption: whether prior booking and imminent possession of a replacement house meets Section 54 timelines. Whether a taxpayer realising a long term capital gain can claim exemption under Section 54 where a replacement residential property was booked earlier, largely paid for and registered, and possession is imminent. The taxpayer cites the statutory conditions that a new residential property must be purchased one year before or within two years after the sale, or constructed within three years, and asks if imminent possession of the booked under construction unit suffices to meet those temporal and transactional requirements for exemption.