Capital Gain Tax on Property Sale through Power of Attorney

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  1. rrvvvr

    rrvvvr New Member

    I want to sell my plot at Chennai, but the buyer, who deals in real estate, is reluctant to get it registered due to cost of stamp duty and registration charges. Instead he is asking me to execute a POA in his favor but says he will pay the full amount and make final settlment. Is this deal valid as a sale? I want to sell this land and buy an apartment. Will I be exempted from Capital Gain Tax when I buy another house with the amount so received? Or will I have to pay capital gain tax when my buyer executes a sale later, using the POA? Pls clarify. I have heard from some that at the time of executing the POA if an affidavit is given to state that I have physically handed over the possession taking the final settlement of consideration, then I can produce the same to the IT authorities if a sale is made later. Pls advice
     
  2. Amit Sahni

    Amit Sahni Active Member

    Yes, what you have heard is correct.

    If the sale is registered at a later stage - the date of registration would be considered as the date of sale.

    However, while executing the Power of Attorney if an affidavit is given to state that you have physically handed over the possession taking the final settlement of consideration, then I can produce the same to the IT authorities even if a sale is made later. In such a case, the date of Power of Attorney would be considered as the Date of Sale.

    And yes, you can claim Capital Gains exemption in this case.
     
  3. rrvvvr

    rrvvvr New Member

    Thanks for your advice. Also pls clarify whether captial gain exemption can be claimed immeidately after I hand over the possession and execute the POA, or will be eligible only when sale is made later, when the buyer sells the land to his customers. Thanks
     
  4. Amit Sahni

    Amit Sahni Active Member

    Yes, you can claim the capital gains exemption immediately when you execute the power of attorney
     
  5. rrvvvr

    rrvvvr New Member

    Thanks for the advice. regards.
     
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