Purchase date for a property taken on installment

Income Tax Income from House Property
1

Hi,
I wish to know what is the purchase date considered for a property which is purchased from a builder and takes time to be built. The builder usually spreads the entire payment into multiple installments.
My objective is to hold a property for > 2 yrs and then sell it so as to incur long term capital gain. But I dont know what date should I consider as purchase date for the same.
I can think of the following , pl help on what applies:

  • Is it the date when all installments for the property are paid to the builder (in this case , does only the sale value installments count or other payments like , club house, corpus etc also needs to be paid?)
  • Is it the date on which the builder issues a possession certificate?
  • Is it the date on which the property is registered in my name?
2

@Bharti_Vasvani if you can help here.

3

Hello @Vijay_Sharma,

As per the order passed by Honourable ITAT in the case of Yogesh Mavjibhai Gala vs. PCIT [ITA No. 3373/Mum/2019] (Mumbai Bench) and Richa Bagrodia Vs. Dy. CIT [2019] 175 ITD 552 (Mum) in the case where the flat is under construction, for the purpose of calculation of the period of holding for capital gains purchase date will be - Date of allotment issued to the assesse.

Hope this helps!

4

Thanks for the info.

5

Hi @Bharti_Vasvani , I have a further question on this. In my case it is a plot from a builder. I dont think a builder issues a posession letter for a plot, isnt it. What would be the purchase date in that case.
The reason behind this query is that my builder is delaying the registration of the plot due to some delay on the govt side. The current financial year will be over in a few days and I will lose the benefit of 1 yr of indexation if I don’t get the possession of the plot within march 2023.
What are the options available for me?

Thanks for your help on this.

6

Hi @Vijay_Sharma,

Registration Agreement date is considered as the date on which the property is purchased as it is the date on which the property gets transferred in your name legally.

Hope this helps!

7

Thanks for the response. But isnt there another option. If I pay the entire amount to the builder, within march 2023 , cant I consider I have purchased it while actual registration may happen a bit later?

8

Hi @Vijay_Sharma

No, there is no other option. Registration agreement date will only be considered as Date of Purchase no matter when you make the payment.

Hope this helps!

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