Saving long term capital gain tax by purchasing under construction flat

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  1. mmanish

    mmanish New Member

    Hello experts,

    I sold my house in April 2016. The money is currently deposited in capital gains account.
    I am planning to buy a flat in a gated society which is under construction.
    The builder will give me allotment letter of flat in Dec 2016.
    The possession will happen in Dec 2019.
    The registration of flat will happen a couple of months before completion so tentatively Aug 2019.
    Complete capital gain from previous flat will be invested by March 2018 i.e. with in 2 years of the sale of old property.

    As per Long term capital gain tax :
    1) a residential property has to be purchased with in 2 years. OR
    2) a house to be constructed with in 3 years.

    Which category purchase of under construction flat comes 2 years or 3 years ?
    What will be considered as purchase date in this case, date of allotment letter, registration or possession date ?
    Will I be exempted of capital gain tax ?
  2. Shivangi Garg

    Shivangi Garg Member

    1) Under construction flat comes in category of 3 years.
    2) Date of allotment will be considered as purchase date.

    Yes, you will be exempted from tax on capital gain provided letter of allotment gives you ownership rights of flat and you have paid a considerable amount of money towards its purchase.
  3. V K Khanna

    V K Khanna Active Member

    Date of allotment of the property is considered as the date of acquisition for tax calculation purposes because the date of allotment is the date when the identified property is actually assigned to the buyer.
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