I am buying as flat directly through builder and i have 2 sale agreement done. one is "Agreement of sale of undivided share of land" and another one is "Agreement of construction" "Agreement of sale of undivided share of land" is between me & land owner. "Agreement of construction" is between me & builder. And whole payment is done to builder. and i am using my capital gain money for this purchase done "Agreement of sale of undivided share of land" between me & land owner(not bulider) is valid and can safe guard the property properly. Will this hamper my tax relief for capital gain in view of "Agreement of sale of undivided share of land".
Well, you have complicated the simple thing which could have been done by a single composite agreement only.
In one composite sae agreement and subsequently sale adeed both the landowner and the developer as confirming could have singed the deed.
Since the sale deed has not been made as yet, you better make the landowner as the Vendor and the developer as confirming party in the Deed of Conveyance. This is how transfer of flat is done whether there is joint development agreement in place.
since you have invested your capital gains from sale of flat in purchase of another flat you can claim exemption from capital gains by entering into agreement for sale of undivided share of land .
Capital gain will get attracted if the proceeds of sale is not reinvested in purchasing a property, as you have purchased, capital gains will not get attracted.
Sale deed and agreement should be entered between the purchaser and vendor(lawful and absolute owner).
An agreement made without any consideration is void, and hence, the Agreement of sale of undivided share of land between you and the landowner is not a valid agreement for there's no consideration flowing under this agreement from you to the landowner.
If you split the payment between the builder and the landowner, only in such a case the said agreement will be vali in the eyes of law.
You can claim your capital gains exemption.
Please check the development agreement and the Power of attorney executed by the land owner in favour of the builder and the clauses in the documents.
It is advised to take a legal opinion from a local Lawyer about the title of the property and on the inter transaction of the land owner and builder.
hi, yes both the agreement are safe and necessary for you to proceed further..kindly share the agreements for detailed guidance over the matter
I presume that the builder holds a Power of Attorney from the land owner. So it is perfectly legal that the Agreement for Sale of UDS is between you and the land owner, whereas the Construction Agreement is between you and the builder. It is the normal practice in any real estate business. Your capital tax gain is duly protected. Not to worry.
1) No the undivided share of land agreement will not hamper any tax relief for capital gains.
2) As both transactions are purchasing power of land and building. So when you calculate capital gains as Index figure it will be beneficial for you.
If you get proceeds from the same it will be taxed as short term or long term capital gains.
1. The agreement for undivided share of land does not create any obstacle in claiming tax relief,
2. You are fully competent to claim tax relief.
Both agreement to sale and for construction are investment.
The capital gains used for this purpose shall fall under the exemptions as provided in section 54 of the IT act.
Following conditions should be satisfied to claim the benefit of section 54.
The benefit of section 54 is available only to an individual or HUF.
The asset transferred should be a long-term capital asset, being a residential house
property.
Within a period of one year before or two years after the date of transfer of old
house, the taxpayer should acquire another residential house or should construct a
residential house within a period of three years from the date of transfer of the old
house. In case of compulsory acquisition the period of acquisition or construction
will be determined from the date of receipt of compensation (whether original or
additional).
Dear friend you have not disclosed about your job profile well so for your question is concerned agreement of sale of undivided share of land is merely an agreement to sell and it does not give a validity to the sale deed unless and until it has been converted into a sale deed, so relax this agreement does not at all hamper your tax relief for capital gain in anyway .
