Selling under-construction flat before possession saves tax
The steep rise in property prices over the past three-four years, particularly in larger cities such as Mumbai, has placed one category of homebuyers in a very fortunate situation. Those who booked yet-to-be-constructed flats three or four years ago, made payments over the past few years at the old booking rates and are now getting possession of the ready flats, are tempted to sell the flats at the high prices that the ready flats now command compared with the price at which they were booked.
If you are intending to sell the flat soon after taking possession, it is better to carry out the sale while the flat is still under construction and possession is not yet taken by you. This will substantially reduce your tax liability in respect of the capital gains, provided of course that three years have elapsed since you entered into the agreement for purchase of the flat.
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