22 September 2008
As the costruction is within the period allowed by section 54, to the extent he spent on construction can claim deduction from CG of the house sold.
I wish to know, whether the construction expense made before the sale of house qualify for deduction u/s 54.
He sold the house in FY07. So does the construction expense for FY05 & FY06 be eligible for deduction.
FY07 & FY08 construction expense are allowed to be deducted from the Capital gain. So 4 lac will be anyhow deducted from 10 lac. So 6 lac will be taxable capital gain or we can deduct earlier year construction expense also.
04 April 2012
The earlier period construction expenses are also allowed as deduction. The condition under Section 54 that the construction is to be completed AFTER the sale.
The construction can start BEFORE sale and complete AFTER sale.
Accordingly, expenses for FY 05 and FY 06 will be available.
CAclubindia
