Selling flat below circle rate
This query is : Open
28 June 2014
Suppose Mr X has recently received the possession of new flat. Now he wants to sell the flat to Mr Y within few months from the possession.
Mr X wants to avoid short term gains.
Hence he enters into agreement with Mr Y such that Mr Y will buy the property after 40 months for a price of Z.
What if Z is below circle rates after 3 years ? Or the circle rate at the time of agreement will be considered ? If the circle rate at the time of possession is considered, the capital gains would be long term right ?
Mr X wants to avoid short term gains.
Hence he enters into agreement with Mr Y such that Mr Y will buy the property after 40 months for a price of Z.
What if Z is below circle rates after 3 years ? Or the circle rate at the time of agreement will be considered ? If the circle rate at the time of possession is considered, the capital gains would be long term right ?
28 June 2014
given that you are trying to avoid STCG, you are also accepting that you are not handing over the possession right now.
If the above position has to hold good, you cannot claim today's circle rate to compute capital gains on a future date. The circle rate as applicable when the possession of the property is handed over shall be referred to to compute full consideration.
If the above position has to hold good, you cannot claim today's circle rate to compute capital gains on a future date. The circle rate as applicable when the possession of the property is handed over shall be referred to to compute full consideration.
28 June 2014
Just found the below post
https://www.caclubindia.com/articles/property-transactions-and-new-tax-effect-17648.asp#.U67-V0BEJik
This suggests that the date of agreement should be taken and not the registry ...
Any thoughts ?
https://www.caclubindia.com/articles/property-transactions-and-new-tax-effect-17648.asp#.U67-V0BEJik
This suggests that the date of agreement should be taken and not the registry ...
Any thoughts ?
28 June 2014
And, even if the circle rate on date of possession holds, it will long term capital gain right ??
30 June 2014
Ownership in property is transferred if following conditions as per sec 53A of Transfer of Property Act are fulfilled:
1. There should be contract in writting
2. Transferee has paid the consideration or is willing to perform his part of the contract and
3. the transferee should have taken the possession of the property
To construe a Transaction as a Transfer in case of immovable property, all the aforesaid conditions should be fulfilled. Mare preparation of Transfer deed for future date would not be considered as a Transfer unless the possession should be taken by the Transferee or any sum paid as a consideration so as to intend to purchase the property. Other conditions are necessary to be fulfilled either fully or partly along with signing of agreement.
Further,New Provision inserted by Finance Act-2013 applicable to transfer of Immovable Properties (not held as capital Assets) say Assets held as Stock in Trade while computing Business Income.
Hence according to me it would be Short Term Capital Gain and Circle rates would be applicable on the date on which possession of property would be handed over to transferee.
I also urge other experts to express their veiw on this issue.
1. There should be contract in writting
2. Transferee has paid the consideration or is willing to perform his part of the contract and
3. the transferee should have taken the possession of the property
To construe a Transaction as a Transfer in case of immovable property, all the aforesaid conditions should be fulfilled. Mare preparation of Transfer deed for future date would not be considered as a Transfer unless the possession should be taken by the Transferee or any sum paid as a consideration so as to intend to purchase the property. Other conditions are necessary to be fulfilled either fully or partly along with signing of agreement.
Further,New Provision inserted by Finance Act-2013 applicable to transfer of Immovable Properties (not held as capital Assets) say Assets held as Stock in Trade while computing Business Income.
Hence according to me it would be Short Term Capital Gain and Circle rates would be applicable on the date on which possession of property would be handed over to transferee.
I also urge other experts to express their veiw on this issue.
03 July 2014
Thank for the responses !!
However, as per couple of CAs I consulted, this should be a long term gain.
Requesting other experts to comment as well ...
However, as per couple of CAs I consulted, this should be a long term gain.
Requesting other experts to comment as well ...
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