Section 54 on plot as a newly purchased property
This query is : Resolved
Shishir Garg
(Querist)
08 April 2015
Esteemed Experts,
What does Section 54 say in this situation?
1) Person A sold a flat in October 2014 and the capital gain out of it is Rs 10 Lac.
2) A has already purchased a plot in December 2013 for Rs 17 lac with a loan of Rs 6 lac.
3) Can the said purchase of plot in the past be considered under Section 54 to save tax on the capital gain on Rs 10 lac?
4) If yes, by when should A complete construction on the newly purchased plot?
What does Section 54 say in this situation?
1) Person A sold a flat in October 2014 and the capital gain out of it is Rs 10 Lac.
2) A has already purchased a plot in December 2013 for Rs 17 lac with a loan of Rs 6 lac.
3) Can the said purchase of plot in the past be considered under Section 54 to save tax on the capital gain on Rs 10 lac?
4) If yes, by when should A complete construction on the newly purchased plot?
CA Mohit Bansal
(Expert)
10 April 2015
No. Exemption is not available in this case as the construction of property should only commence after the transfer of original property and construction should complete within 3 years from the date of transfer
Shishir Garg
(Querist)
10 April 2015
Thanks Mohit. The construction on the plot has not started yet. Does this make it eligible for exemption if the construction is started now?
CA Mohit Bansal
(Expert)
10 April 2015
No. Construction includes purchase of plot too
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