Capital gain - period of holding, under construction mou
This query is : Resolved
28 November 2023
assesseee got allotment letter/mou dated 2009 from builder
got flat possesion from builder and registered in 2015
after possession , sold flat to new buyer in 2016
question --> while calculating cap. gain for 2016, period of holding will be from 2009 or 2015?
my view --> from 2009 as mou /allotment letter can be said to be purchased (albeit it was just a right in capital asset back in 2009)
got flat possesion from builder and registered in 2015
after possession , sold flat to new buyer in 2016
question --> while calculating cap. gain for 2016, period of holding will be from 2009 or 2015?
my view --> from 2009 as mou /allotment letter can be said to be purchased (albeit it was just a right in capital asset back in 2009)
06 July 2024
When calculating capital gains on the sale of a property, the period of holding is crucial as it determines whether the gains are short-term or long-term:
1. **Period of Holding Definition:** The period of holding is calculated from the date of acquisition of the asset until the date of its transfer.
2. **Acquisition Date Clarification:** In your case, the acquisition of the right in the property (through the allotment letter/MOU) was in 2009. This date is relevant because it establishes your ownership interest or right in the property.
3. **Transfer Date:** The property was physically received and registered in your name in 2015, and subsequently sold to a new buyer in 2016.
### Determining the Period of Holding:
- **From 2009:** The capital gains on the property will be treated as long-term if the period of holding from the date of acquisition (2009) to the date of transfer (2016) exceeds 24 months.
- **From 2015:** If you consider the period of holding from the date of physical possession and registration (2015) to the date of transfer (2016), it would be less than 24 months, making it a short-term capital gain.
### Conclusion:
- **Correct Approach:** Typically, for the purpose of calculating capital gains, the period of holding starts from the date of acquisition of the right in the property, which in your case is 2009 (through the allotment letter/MOU).
- **Long-Term vs. Short-Term:** If the period from 2009 to 2016 exceeds 24 months, the gains will be treated as long-term capital gains, which have different tax implications compared to short-term capital gains.
- **Consultation:** It's recommended to consult with a tax advisor or a chartered accountant to ensure accurate calculation of capital gains based on your specific situation, including any provisions under the Income Tax Act applicable at the time of sale.
By clarifying the period of holding from the initial acquisition date (2009), you can accurately determine the nature (long-term or short-term) of the capital gains on the property sold in 2016.
1. **Period of Holding Definition:** The period of holding is calculated from the date of acquisition of the asset until the date of its transfer.
2. **Acquisition Date Clarification:** In your case, the acquisition of the right in the property (through the allotment letter/MOU) was in 2009. This date is relevant because it establishes your ownership interest or right in the property.
3. **Transfer Date:** The property was physically received and registered in your name in 2015, and subsequently sold to a new buyer in 2016.
### Determining the Period of Holding:
- **From 2009:** The capital gains on the property will be treated as long-term if the period of holding from the date of acquisition (2009) to the date of transfer (2016) exceeds 24 months.
- **From 2015:** If you consider the period of holding from the date of physical possession and registration (2015) to the date of transfer (2016), it would be less than 24 months, making it a short-term capital gain.
### Conclusion:
- **Correct Approach:** Typically, for the purpose of calculating capital gains, the period of holding starts from the date of acquisition of the right in the property, which in your case is 2009 (through the allotment letter/MOU).
- **Long-Term vs. Short-Term:** If the period from 2009 to 2016 exceeds 24 months, the gains will be treated as long-term capital gains, which have different tax implications compared to short-term capital gains.
- **Consultation:** It's recommended to consult with a tax advisor or a chartered accountant to ensure accurate calculation of capital gains based on your specific situation, including any provisions under the Income Tax Act applicable at the time of sale.
By clarifying the period of holding from the initial acquisition date (2009), you can accurately determine the nature (long-term or short-term) of the capital gains on the property sold in 2016.
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