Sec 54- Capital Gain

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Amit (Querist)
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21 June 2008 Purchased two flats in FY 05-06: Details given below:
Flat 1:
Date of purchase (date of first receipt from the builder): 11 January 2006
Date of Sale Agreement: 13 January 2006
Date of registration: 7 February 2006
Date of Possession: 23 November 2006

Flat 1:
Date of purchase (date of first receipt from the builder): 9 March 2006
Date of Sale Agreement: 25 March 2006
Date of registration: 24 April 2006
Date of Possession: 23 November 2006

I intend to sell bothe these flats and
buy one large flat for my family

Q1: When wld the 3 yr period complete for qualifying as LT Capital Gain
Q2: Can i get benefit of setting of the LTCG against cost on the one new flat (cost wld be higher than the LTCG of bothe flats combined)
Q3: Beleive the new flat has to be acquired either one year prior to the date of transfer or two years after. Wld the period of new asset acquistion be calculated from date of token ot date of sale deed or date of registration.

Will appreciate your response.

Satish K Sekhar.ACCA

Satish K Sekhar.ACCA (Expert)
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21 June 2008 Q1- For the purpose of LTCG calculation of the period of 3 years would start from the date of sale agreement of the immovable property.

Q-2 Yes it is possible (however pls. refer below -Q-3).

Q-3 under first instance ,I assume that the new flat is to be purchased prior to the sale of old 2 Flats. In this case you stand no chance of getting the benefit of avoiding LTCG that may gain from the sale of old Flats. To claim LTCG you need to sell both old flats and park the funds in a seperate account and buy the new flat. What you need to do in this situation is to document the dates of sale agreement of your selling flat and buying flat in such a manner that date of sale agreement of your old flats should be prior to the date of sale agreement of your new flat.

In the second instance If you are buying the new Flat after 2 years of selling the old flat then it is necessary for you to park the sale proceeds of your old flats in seperate bank account and then disburse it from the account for the acquisition of new flat. Here also the date of sale agreement is considered for determining the date from when the ownership of the property is transferred to you.
Thank you

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