Capital gains -Sellng land in Delhi

[i2d2]

I have a question around claiming exemption u/s 54, if I have bought a flat (already registered) just before the sale of land, can I claim?

Ex: I have bought a flat (80L) and registered in May 2016 and I am now selling the land in Dec. 2016, and have a Capital gains of about Rs. 80L on the sale of land, can I claim the flat I have bought, for the exemption under section 54 and pay no taxes, as capital gains offset the flat cost? Note that the 80L to buy the flat were sourced from other sources of taxable income.

Can any one clarify please?

[Exemption u/s 54, clause says:

The new house has to be bought one year before (under-construction property) the transfer of the first house or within two years after the sale. (For an Under construction property or flat , the construction has to be completed within three years of the transfer of the first property.) ]

[RAJESH H DHRUVA]

Dear i2d2,

1. Yes the Section has built in the possibility of purchase price of new house property being paid out of proceeds of old asset.

2. However the new house property is to be retained for 3 years.

3. Of course the capital gains will be liable to gains tax in USA.

Best wishes
RAJESH H DHRUVA
femaonline.com

[i2d2]

Thanks Rajesh for the clarification. But the question is, since I have already got it registered with my own funds (sources other than selling the asset where the Capital gains are coming from), is that ok? Chronologically, buying a new home with other sources of money is happening first and then sale. Is that ok?

[RAJESH H DHRUVA]

Dear i2d2,

1. Yes the exemption is granted when one purchases a new asset out of own funds.

2. The Section is plain vanilla English and provides for purchase of houseproperty within one year
Prior to sale of asset under consideration.
.02 And logically and practically the purchase prior to sale can be paid only by other funds other than the sale proceeds.
.03. And the Section DOESNOT mention that the purchase should be out of advance money received as part of sale to be taken at a future date of the property under consideration.

Best wishes

RAJESH H DHRUVA
femaonline.com

[i2d2]

Dear i2d2,

1. Yes the exemption is granted when one purchases a new asset out of own funds.

2. The Section is plain vanilla English and provides for purchase of houseproperty within one year
Prior to sale of asset under consideration.
.02 And logically and practically the purchase prior to sale can be paid only by other funds other than the sale proceeds.
.03. And the Section DOESNOT mention that the purchase should be out of advance money received as part of sale to be taken at a future date of the property under consideration.

Best wishes

RAJESH H DHRUVA
femaonline.com

Thanks for the clarification. Thanks again for the great service you do to this forum.