Sale and purchase of house properties

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Anil Das (Querist)

24 August 2019 My IT return for FY 2017 - '18 included the following house properties:

House A - Self-occupied, purchased with housing loan,
House B - Deemed Let-out, purchased with housing loan

The scenario during FY 2018 - '19 is:

House A - sold in Jun '18, resulted in Long Term Capital Gain of Rs. 15 lakh,
House C - purchased in Aug '18 for Rs. 30 lakh with own contribution of 3 lakh and housing loan of Rs. 27 lakh,
House B - remains Deemed Let-out.

In view of the above, can you please let me know the following information?

1. Cost of C was higher than Capital Gain from A, and C was purchased soon after sale of A. Although C was purchased with housing loan, hope I can avail the capital gain exemption under Section 54 (as per many judgments of tribunals/courts). Can you please confirm the same?

2. Agreement date for House C (ready-to-move) was 10/07/2018, major/full payment date 25/07/2018 and possession date 04/08/2018. Registration not yet done due to some issues at developer's end. Which date should be considered as date of purchase/construction? Is it possession date or some other date? Can section 54 exemption be availed even if registration not yet done?

3. House A was self-occupied for 3 months before its sale and House C self-occupied for 8 months during the FY.
I am not sure if I need to show both House A & C in 'Income from House Property' head for IT return FY 2018 - '19 i.e. AY 2019 - '20. Shall I consider House A as self-occupied and House C deemed let-out? Or, can House A be deemed let-out and House C self-occupied, as Gross Annual Value is much higher for House C (and hence more deduction if it's self-occupied)? House B is deemed let-out as before.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

25 August 2019 1 Capital gain exemption can be availed.
2 Section 54 exemption can be availed as amount has been fully invested.
see thr link.
https://www.charteredclub.com/cap-gain-exemption-if-construction-not-completed-in-3-years/
3 Yes it's allowed.

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Anil Das

Anil Das (Querist)

25 August 2019 Many Thanks Sir for all the answers.

About answer 3, is it mandatory to show Income/loss from sold House A? FYI, I paid 2 EMIs for House A loan before its sale. If I exclude House A and only show House C & B as self-occupied & deemed let-out respectively, tax payable is lesser. But I am not sure if it is appropriate to exclude House A in 'Income from House Property' head in this scenario. Generally we show all house properties with income/loss. My confusion is due to the fact that House A was sold during the FY (i.e. Jun '18).