LTCG / Under construction flat / Selling before or after possession ?

[Sunil Mittal]

Hi

I booked from builder under construction flat in Aug 2006 . It will be ready for posession in Oct 2012 . I want to know the following .

1) If I sell before possession , will the gain be LTCG ?

2)  If I sell immediately after possession ( means after registry in my name ) ,  will the gain still be LTCG or I have to wait another 3 year after possession to avail LTCG ?

[sanjeev bajaj]

Dear Sunil Mittal

1. If You sell the booking of flat before possession than it will be considered as selling of rights of such flat as it is not house property. Accordingly it will be considered as LTCG as more than 3 years has been elapsed.

 

2. I f you sell after possession, whether sale deed is executed or not than it will be considered as house property then the period will be counted from the date of possession when you become the owner.

Regards

Sanjeev Bajaj

AI Summary

Long-term capital gains treatment depends on whether sale is of pre-possession booking rights or of house property after possession. Sale of a pre-construction booking is a transfer of rights and the period of holding is counted from the booking/assignment date; if that period exceeds the long-term threshold the gain is treated as long-term capital gains. Sale after possession and registration is treated as sale of house property and the period of holding is counted from the date of possession for determining long-term capital gains status.