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Capital gain on residential flat

Vikas Gandhi (Chartered Accountant) (37 Points)

22 October 2013

Date of Booking of Residential Flat December 2009 (Status : Under construction)

Date of Registration of Document March 2010

Date of Possession April 2013 (Status : Fully constructed)

Date of Sale of Flat September 2013

Whether Capital gain arising on above transaction would be considered as Short Term Capital Gain or Long Term Capital Gain? Do quote legal judgement if any, in support of your answer.

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6 Replies

Mihir (Wealth Manager) (5293 Points)
Replied 23 October 2013

It shall be short term capital gain. The date of possession is April 2013 and sold on September 2013, which is less than 36 months.

If you sell the flat before possession, then date of allotment shall be considered, otherwise the date of possession, for the purpose of capital gain.

CA Pallav Singhania (❤ Work Hard Party Harder ❤) (32322 Points)
Replied 23 October 2013

Agree with Expert Mihir ji,

As the Date of Possession is relevant..

It cannot be said sell of Right.,As the property is sold after construction within a period of 36 months..

It will be treated as Short Term Capital Gain, No exemption will be allowed under any section..

Komal Sharma (Assistant Accountant) (1887 Points)
Replied 23 October 2013

Agree with Mihir ji n Aryan Sir Short-Term Capital gain will arise in sale of Flat.

Studentsca (CA Practice ) (3577 Points)
Replied 23 October 2013

According to Us it Should be Long term capital gains because in Income Tax the Date of Purchase of property is given importance (i.e in your case March 2010). Since Registration of Property is considered as purchase of immovable property. In your case as the property was not in ready possession at time of purchase of the property it will be considered as purchase of rights of the immovable property & also the payment for the property was made in the due course of Construction of the Immovable property. Hence it Should be considered as as long term Capital gains.

RAJESH GUPTA (SR. MANAGER) (33 Points)
Replied 23 October 2013

I fully agree with studentsca, as the date of agreement is considered as date of your rights on the property, onlything that flat number is to be mentioned in the agreement. Since it is more than 3 years between sell & creation of right over the property (flat), as per the agreement, it is to be considered long-term capital gain.

Vishal (Others) (28 Points)
Replied 26 February 2014

Hello Sir,

I have a query on the Capital Gain, please help me to understand.

I had booked a flat (construction was not started at that time) in March 2010.

Got the Allotment letter on August, 2010.

The flat is still under construction till date and builder will give the possession in dec 2015 (Not sure). I have sold this flat on Jan 2014.

I have got some appreciation on this so please let me know that the appreciation amount is under long term capital gain or short term capital gain or any other?

If this consideration is under Long term capital gain and I purchase a new flat then do I have to pay any tax on this or not?

Please guide me.

Vishal