Celebrate Freedom with 10% OFF on CAclubindia Pro Membership. Subscribe Now!

Income tax consideration for sale of apartment

489 views

Save Share

Guest

Hello:

I was looking for some help and guidance please.

Context:

I booked an under construction property in sept. 2009 and am getting the possession in April 2013. However, the property will have to be registered for possession.

Also, I have got an offer for sale on the same property and have a few queries regarding taxes.

Questions:

1. Will the proceeds from the sale be treated as short term capital gains?

2. What is my tax liability? Is it the the difference between the registered value of the property (i have to register the property before any sale) and the sale deed? or the difference between the value I booked the apartment for in june 2009 and the sale deed value in april 2013?

Thank you for your help.

-Adil

Replies (1)

Mihir

Wealth Manager

5293 Points Posted on 24 March 2013

It depends on the documents you have signed with the builder stating that you have booked a flat in the to-be constructed building. You have booked a flat which means you have purchased a right to possess the flat as and when the construction of the building is complete. Right to possess is a capital asset, and so you should be able to avail ltcg. But it all depends on the booking agreement. You must have paid to the builder as per the schedule of construction completed. Wait for others to reply.