We have an ancestral property that we are giving for redevelopment. After the construction, three-fourth of the property will be with us and the rest will be with the builder. Will we be taxed for the portion with the builder? If we were to sell the parts with us, will our holding be considered long term or short term? We inherited the house in 2001 and it was bought in 1985.
—Karthikeya
Tax laws were recently amended to tax the capital gains arising to an individual from a real-estate development project, where an existing property (either land, building or both) is handed over to a builder to re-develop, in the financial year in which the competent authority that approved the building plan issues a certificate of completion for either the whole or part of the project. Your family will need to have a registered agreement with the builder permitting the development of a real estate project. Such capital gains will be taxable in the hands of each family member depending on their share in the property.
