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Capital gain on sale of house

G.Veerabadran (Chartered Accountant) (67 Points)

04 April 2013

Dear friends,

A has purchased Land on 03/03/2012 and construction is over on Sep 2012 and occupied the house in Oct 2012.

He paid the money from his own funds in instalments for building first amount was given in March 2012 and the final

payment made in Oct 2012. ( New)

1) He wants to sell his house ( old) house and claim exemption under long term capital gain and he purchased

15 years back.

2) Whether he should have sold before 3rd March 2013, or he can sell upto Sep 2013 ?

3) One year period is purchase of land or for construction?

Kindly clairfy.

Thanks

G.Veerabudran

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6 Replies

VIKAS.A (SOMETHING IS BETTER THAN NOTHING) (1095 Points)
Replied 04 April 2013

i think purchase should be a residential house property not land, i hope this would be easily solved by other experts, wait for others to reply

Ramcharan (Article Asstiant) (37 Points)
Replied 04 April 2013

1) If A want to claim exemption he should sell the property before 03.03.2013. He can purchase the new Constructed House property with in 2 years from the date of sale i.e., 02.03.2015 or he can construct the new house with 3 years from the date of sale i.e., 02.03.2016.

2) Yes, before 1year from the saleof property you can purchase a constructed residential house property to claim exemption U/s 54.

Khushbu Jaiswal (CA Finalist) (528 Points)
Replied 04 April 2013

In my opinion he can sell the house upto sept 13

Because capital gain exemption is available for residential house and not for land which is completed on Sep 12.

VIKAS.A (SOMETHING IS BETTER THAN NOTHING) (1095 Points)
Replied 04 April 2013

should agree with ram and kushboo a little,

@ ram,it is the basic rule for which we need not sell on 3rd march we can sell even on september( @ 1st condition said by him),

@ kushboo, as per the rule it should be purchase of resedential house and not the constructed after purchase of land,

better option is that sell the constructed house to any relatives and again buy this so that it will be a purchase of resedential house,so that u can wait up to september, or else sticking to ram u may require to purchase or construct with in 2 or 3 yrs respectively.

i dont know whether it is practically possible or not, so i didnt say this,

correct me if i am wrong,

thank u

Khushbu Jaiswal (CA Finalist) (528 Points)
Replied 04 April 2013

Yes Veera ji Vikash is right. for claiming exemption, a residential house property should be acquired as follows:

Section 54 says that "Purchase 1 year backward or 2 years forward" and in case of "construction 3 years forward" of residential house property and it should not be transferred within 3 years. otherwise the exemption will be revoked.