I own a residential property (property A). I bought another property (Property B) - land with old house built. I have demolished old house on this property B and started building a new house thereon. Now I have decided to sale property A.
Property A was purchased for Rs. 9 lacs in Oct 1994
Property B was purchased for Rs. 35 lacs in Oct 2010
Expected cost of construction on property B is Rs. 30 lacs (started from Oct 2011 and to be completed by Dec 2012)
Therefore, total cost of new residential property is 65 lacs.
Property A will be sold for Rs. 75 lacs in February 2012.
Long term capital gain arising from sale of property A (after considering cost inflation index) : Rs. 48 lacs
Will this long term capital gain be completely adjusted against my cost of contructing a new residential property (that is purchase of land and construction thereon) ?
Thanking in advance for your learned opinion,
shreekant
CAclubindia
