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Long term Capital gain Tax Query on sale residential property

Tax queries 479 views 1 replies

Anupam Bhandari

4 Points Posted on 07 August 2024

Sale of Property dated: 06-29-2024
Purchase of Under Construction Property dated: 03-28-2024 (price 1.7 cr)
Long-term capital gain- 37 lacs
Written date of Possession on the agreement for the new property: 12-31-2027

Capital gains condition says need to hold for at least 3 years else tax benefit will be reversed.
Another condition says possession needs to be within 3 years from the purchase date.

My question:
1. Will I get a tax benefit if possession is after 3 years from the purchase date?
2. I satisfy the condition of holding the property for 3 years from the purchase date on 3-29-2027, can I sell after this date and still claim tax benefit?

Replies (1)

Chandrashekar M

18 Points Posted on 11 August 2024

Based on the information provided, here are the answers to your questions:

1. _Possession after 3 years from purchase date_: You may not get the tax benefit if possession is after 3 years from the purchase date (March 28, 2027). The condition specifies possession within 3 years, so possession on December 31, 2027, might not qualify.

2. _Holding property for 3 years and selling after_: Yes, you can sell after March 29, 2027, and still claim the tax benefit. You've satisfied the 3-year holding period condition.

However, please note:

- The tax benefit is subject to your meeting all conditions under Section 54 of the Income-tax Act, 1961.
- The property purchased should be a "residential house" to qualify for the tax benefit.
- You should not sell the new property within 3 years from the date of possession to avoid reversal of the tax benefit.