Rajiv (fgfg) 26 September 2010

capital gains tax

Hello Experts,

I have recently sold off a house, which I was holding for 30 yrs. I understand that the capital gains tax can be avoided if I buy a property within the next two years and get it registered. I plan to buy a under construction flat from a builder and do 95% payment right now. But it may so happen than the flat may not be ready to be registered in two years from now due to delay by the builder. Will I be required to pay the property gains tax in that case?

If the competion date of the flat is within two years in the flat buyer aggreement will that help me to avoid the tax?

Thanks

Reply Follow

2 Replies

MD FAISHAL (TAX CONSULTANT) 27 September 2010

No, You do not have to pay the Long Term Capital Gain tax in this transaction since you have earned the beneficial ownership of the flat by paying the 95% of the cost of the flat and in Income tax, it is the beneficial ownership and not the actual ownership which matters and registration is only for the purpose of collecting state taxes like stamp duty.

1 Like

Vaibhav (soldier) 04 October 2010

Thanks Mr Faishal,

As I understand I will need to the submit to the IT department the reciept of the builder which says that I have payed 95% amount to the builder for the residential flat in so and so project. I will also probably need to submit a copy of the flat buyer aggreement

regards,

Rajeev