What are the revenue tax implications of promoting a under-construction flat?

My mom has bought a residential plot in June 2022 which was purchased in FY 2007-08. She can be planning to promote a semi-finished duplex (building not but accomplished after years of due date for builder’s fault) which was booked in Dec-2011. Can she save taxes by making investments in one other residential home? She already owns one residential flat.

Answer: Since the plot is being bought after 24 months and the semi-finished duplex is being bought after 36 months the capital positive factors of each the belongings could be handled as s long run capital belongings and the earnings are to be taxed as long run capital positive factors.

Your mom can definitely declare exemption for long run capital positive factors arising on sale of residential plot in addition to the unfinished home property beneath part 54 F of the revenue tax act. For claiming the capital positive factors exemption beneath part 54F your mom must make investments your complete quantity obtained on sale of those belongings inside two years for buy of a brand new residential home or get a brand new residential home constructed inside a interval of three years. She may guide and beneath building property however the building must be accomplished inside three years from date of sale of those belongings. Since your mom owns just one home along with what she intends to purchase, she is eligible to assert the tax advantages beneath Section 54 F.

In case the quantity just isn’t absolutely utilised for purchasing the residential home by the due date of fling of the ITR i.e. thirty first July 2023, the unutilised quantity must be deposited within the checking account to be opened beneath Capital Gains account scheme which can be utilized inside the time specified for the aim of creating fee for the home. The new home must be held for 3 years. In case solely a part of the sale proceeds are invested for the proposed home the exemption accessible beneath Section 54F will get lowered proportionately.

Balwant Jain is a tax and funding professional and will be reached on jainbalwant@gmail.com and @jainbalwant on Twitter.

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