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Capital gain exemption on new purchase of under construction property

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Poonam Mirani

24 Points Posted on 09 May 2024

in case of purchase of a residential flat which is under construction,how is the time limit of purchase or construction applied?

old flat is not sold yet and booking of new flat is done and part payment is done and agreement to sell will be done next week.the possession will be given after 2 to 3 years.

so what should be the date of sale of an old house if planning to sell in the coming month so as to be eligible for claiming exemption.I mean if this new purchase is considered as construction then whether agreement made before one year from the sell date will be eligible or 1 yrs before limit won't be available.

Replies (2)

Quick Summary

This discussion clarifies capital gains tax exemption rules when purchasing an under-construction property to replace an old one. It explains that the exemption under Section 54 of the IT Act is typically linked to the possession date of the new property, which must be within three years of selling the old one. The agreement to sell for the new property, even if registered, is not the definitive date; the final payment and sealing of the deal are key.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121534 Points Posted on 11 May 2024

Agreement of sale is not equivalent to Sale Deed, though registered. You can claim exemption u/s. 54 of IT act, if you have received possession of the new flat within 3 years of sale of the old house, when the final payment to builder will be completed, thereby sealing the deal.