20 January 2013
a) purchased an under construction property (flat in Multi story) from builder in August 2006, by way of "Builder buyer sale agreement". No other registration/conveyance deed executed. b) payment terms of the property were to pay as construction progresses. c) took home loan from HDFC for the same in August 2006. d) builder started construction and raised demand for installments which were paid mainly by HDFC by increasing the disbursed amount regulary. e) HDFC charged monthly interest on the home loan (EMI was not started as property was under construction)and was paid every month. f) while the property was under construction, the same was sold in October 2012 to an individual by executing transfer under the "Builder buyer seller agreement"itself. Again no conveyance deed/registration took place in REgistrar's office. the sale was effected in October 2012.
Query: a) will the difference in sale price and cost price will result in LTCG? b) if yes, can the tax on LTCG be reduced by investing in another house property withing next 2 years c) will the Interest paid on the home loan till the date of sale be added to the cost of acquistion as the same could not be claimed u/s24 as house property was not complete.
21 January 2013
In my view on understanding the facts, the answers are: a) Will the difference in sale price and cost price result in LTCG? Yes, the difference between the Sale Price and Indexed Cost Price is Taxable as a Long Term Capital Gain
b) If yes, can the tax on LTCG be reduced by investing in another house property within next 2 years? Yes, you can avail the exemptions under 54 or 54F based on the satisfaction of the relevant conditions applicable to them.
c) Will the Interest paid on the home loan till the date of sale be added to the cost of acquisition as the same could not be claimed u/s24 as house property was not complete? Yes, the Interest component should be added to the cost of the property.
I hope this suffice your present query. With Regards, CA. SUDHARSAN K G
CAclubindia
