Dear All,
Please advise your understanding on below example:
I have 2 properties under my name:
1. Property in Ahmedabad (100% my name) - more than 5 years old purchase.
2. Another property in Mumbai (under construction) - Flat bought under 80-20 subvention scheme i.e. I paid 20% upfront to the builder and bank paid 75% to the builder via a tri-party agreement, between bank/builder/me, with me being the taker of loan (balance 5% bank will pay to builder on possession). Registration of the flat was done in 2013 and allotment letter was provided then. Builder pays the Pre-EMIs till possession (although my responsibility to the bank is mine if the builder defaults on payments). Probably restriction on selling before possession. Possession probably by December 2019.
My father has one property in Mumbai. more than 5 years old purchase.
I am interested in buying another property in Mumbai which is under construction with possession in December 2019.
If my father & I sell all the current properties (2 mine & 1 his) and invest the money in this new flat (new flat value is higher than the total capital gains from sale of all 3 flats), can we both claim Section 54 benefit in below scenarios:
1. Sell all current flats, including the one under construction and buy the new underconstruction flat before March 2019 but possession of the new flat will be in December 2019.
Will I need to pay capital gains tax in AY 2019-20 and claim back the same (via Section 54) in AY 2020-21 since the possession of new flat is in December 2019 or the exemption u/s 54 can be claimed in AY 2019-20 since the registration of the flat will happen before March 2019 in spite of possession being in December 2019? Can we both get full exemption u/s 54?
2. Sell the current 1 flat each of my dad & mine and buy the new underconstruction flat before March 2019. Sell the underconstruction property in December 2019 after possession due to selling restrictions. The possession of new flat in December 2019.
In the above scenario, will my dad & I be able to claim the exemption u/s 54 in AY 19-20 & also in AY 20-21 (when the present underconstruction property is sold after possession)?
Last question - I assume that the period of 2/3 years from purchase date will be counted, with regards to capital gains, from the registration/allotment of the flat in 2013 and thus the gain on sale of current under construction property would be considered long term capital gain and not short term capital gain (on the basis of possession in December 2019 and immediate sale).
Regards,
Pratik Doshi
CAclubindia
