Taxation confusion in constructing builder floor

Let me take an example to explain the situation : I sell my 1st house in X amount, buy another plot for Y amount and finally get floors built on that plot through builder for Z amount. This process overall takes 2.5 years. The Z amount I pay the builder through selling one floor. Finally I don't have any amount left with me, rather a loss.

Y (PLOT AMT) + Z (PAID TO BUILDER) > X (RECEIVED AMOUNT ON SELLING FIRST HOUSE) in 2.5 years

Example:

Y = 50 lacs, Z = 40 lacs, X = 50 lacs

Y+Z ( 50 + 40 ) = 90 > X (50 )

Do I need to pay any tax now?

Replies (3)
Quick Summary
This discussion explores the complexities of capital gains tax when selling a property to fund the construction of a new builder floor. The user provides an example where the total cost of acquiring a plot and constructing floors exceeds the sale price of the original house, leading to a perceived loss. The core question is whether capital gains tax is applicable in such scenarios, especially considering the timeline between selling the old property, buying the plot, and completing the construction.

Yes u need to pay capital gain tax on sale of immovable property.

Originally posted by : Raj Malhotra
Let me take an example to explain the situation : I sell my 1st house in X amount, buy another plot for Y amount and finally get floors built on that plot through builder for Z amount. This process overall takes 2.5 years. The Z amount I pay the builder through selling one floor. Finally I don't have any amount left with me, rather a loss.

Y (PLOT AMT) + Z (PAID TO BUILDER) > X (RECEIVED AMOUNT ON SELLING FIRST HOUSE) in 2.5 years

Example:

Y = 50 lacs, Z = 40 lacs, X = 50 lacs

Y+Z ( 50 + 40 ) = 90 > X (50 )

Do I need to pay any tax now?

In these you are acquiring the plot from the whole consideration therefore no capital gain would arise if plot is acquired within time limit of income tax.

Probably need bit more here

Date for X -  Feb 2018, sold 1st house

Date for Y -  April 2018, bought 2nd house

Date for Z  -  November 2020, sold and paid floor to payback builder

Does it fall within the time limit for any capital gain? What is ideally needed to avoid any tax for floors construction as this is a common need of today?

 

 

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