You are liable to pay property tax on your flats as long as you are holding the 2 flats 

once you sell the flats no property tax is payable by you 

in respect of flat constructed by you property tax would be leviable 

Sec. 54 states, “… where… the capital gains arises from the transfer to a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head ‘Income from house property’

Even if the assessee sells more than one residential property in the same year and the capital gains are invested in a new property, claim for exemption cannot be denied if other conditions under the section were fulfiled

it is not possible to answer without the actual figures

if the amount that remains from the sale value after deducting the cost of acquisition and cost of improvement for the 2 flats, is in the negative or is negligible then the capital gains will be very less and consequently the capital gains tax also will be less

and even if there is any capital gains, you can invest that in the construction of your new house for which you will be entitled to claim a deduction

Dear Client,

The seller of a residential property benefits from capital gains tax under Section 54 of the Income Tax Act if the seller uses that sum to build another residential property. In this instance, the goal is to purchase another acceptable home rather than to profit from the sale of the previous one. This provision allows you to claim an exemption from capital gains tax if you invest the sale proceeds in a new residential property.

There are certain conditions that must be met to avail of this benefit:

The new property must be a residential property. Investing in commercial property will not make you eligible for this exemption. You need to invest the proceeds in the new property either one year before the sale or within two years after the sale. Alternatively, you can also invest in the construction of a new property within three years. If you are unable to invest the proceeds before filing your income tax return, you can deposit the amount in a Capital Gains Account Scheme with a bank. This amount must be used for the new property within the stipulated time frame.

The cost of interiors is not considered while calculating capital gains. Capital gains are generally calculated as the difference between the sale value and the indexed cost of acquisition/improvement.

No exemption can be claimed from paying property tax for the property you possess as a owner.

If you sell the property then there is no question of paying the property tax.

At the present date, the long-term capital gain on property is calculated at a 20% tax rate with some additional cess and surcharge rates if applicable. However, short-term capital gain from a property is charged at the normal slab rate.

While selling the properties:

The cost of acquisition and improvement is indexed by applying CII (cost inflation index). It is done to adjust for inflation over the years of holding the asset. This increases one’s cost base and lowers the capital gains.

The cost price is adjusted for inflation and indexed cost of acquisition is taken.

indexation applies only to assets held for long-term.

The exemption under Section 54 is available when the capital gains from the sale of house property are reinvested into buying or constructing two another house properties (prior to Budget 2019, the exemption of the capital gains was limited to only 1 house property).

The exemption on two house properties will be allowed once in the lifetime of a taxpayer, provided the capital gains do not exceed Rs. 2 crores. The taxpayer has to invest the amount of capital gains and not the entire sale proceeds. If the purchase price of the new property is higher than the amount of capital gains, the exemption shall be limited to the total capital gain on sale

It will be only on the gain you earned by selling both properties