Ltcg split between land & building

Jag Mohan (Retired Finance Professional)   (41 Points)

30 October 2014  

A close friend has a plot in India bought about 14 years ago that has given him good capital appreciation.

Now he has another 2 residential flats in India apart from this plot.

If he sells the plot and reinvests in a residential house or flat, he will not be covered u/s 54 but only Sec 54F and since he is already owning 2 flats, he will not be eligible for Capital gains exemption.

Now in order to fit u/s 54,if he makes a small house on that plot and sells it immediately thereafter will the capital gains be apportioned between the land (Long term) and house(Short term).

To give an example

Land bought in 2000                         20 lakhs

House raised in 2014                         10  Lakhs

Sale value 2 Cr in 2014 .What will be the LTCG and STCG assuming that the figures above are after adjusting cost of lnflation index as specified.

Can he claim deduction u/s 54?

Please provide citations, if any. 

THANKS INDEED. GOD BLESS YOU.