Articles
Long Term Capital Gains (LTCG) on Sale of a House Calculation and Income Tax
This article guides you through the entire process by giving step by step calculations for arriving at the long term capital gains on sale of a house. You can also download a spreadsheet containing examples for many different scenarios.
|
In Long Term and Short Term Capital Gain - Income Tax Calculation, we understood what a capital asset is, what capital gain is and how it is classified into long term capital gain & short term capital gain.
We also briefly touched upon the topic of income tax calculation on these gains. |
Now, lets understand calculation of long term capital gain on a sale of a house (a flat or an apartment or an independent house - any residential property) in detail.
(Do you know when the capital gain from the sale of a house is classified as long term capital gain? Please read Long Term and Short Term Capital Gain - Income Tax Calculation to find out)
How Inflation Affects Cost of Acquisition
Lets say you bought a house in Jan 1989 for Rs. 2 Lakhs. You sell it in Oct 2007 for Rs. 20 Lakhs.
(You need to be logged-in to download the spreadsheet. For free registration that takes less than a minute, please click here. To know the benefits of registration, please click here.)
Sounds like an odd question, right? This is something that even a 5th standard student can answer! Obviously,
Profit = Sale Price Cost Price (or Acquisition Price)
And therefore, your profit in this case would be Rs. 20 Lakhs Rs. 2 Lakhs = Rs. 18 Lakhs.
Well, it is in fact right. But do you think the value of Rs. 2 Lakhs in 1989 was the same as it was in 2007?
Of course not! Rs. 2 Lakhs could buy a lot more in 1989 than in 2007. The value of the Rupee decreases every year due to inflation.
So, is it right if we just subtract a price paid in 1989 from the price we obtained in 2007 to calculate the profit?
Logically thinking, this wouldnt give us the true profit.
Fortunately, the department of income tax also thinks this way! And therefore, in the income tax rules, there is a provision of indexing the cost price in order to arrive at a price that is comparable to the sale price. (This price is called the Indexed Cost of Acquisition)
Indexation Using the Cost Inflation Index
An important concept to understand here is that of the cost inflation index.
This is a number derived for each financial year by the Reserve Bank of India (RBI), and it depends on the prevailing prices during that financial year.
The number in itself doesnt convey much. But the change in the cost inflation index figure is indicative of the inflation during those years.
Thus, if we see the change in the cost inflation index between say 1989 and 2007, it would give us an indication of the change in prices between these years.
Or, in other words, it would give us an indication of the change in the value of the Rupee between these years.
And therefore, as you would have guessed by now, we need to use the cost inflation index for these two years to find the Indexed Cost of Acquisition.
Cost Inflation Index Table: From FY 1980-81 to FY 2008-09
| Financial Year | Cost Inflation Index (CII) |
| 1981 - 82 | 100 |
| 1982 - 83 | 109 |
| 1983 - 84 | 116 |
| 1984 - 85 | 125 |
| 1985 - 86 | 133 |
| 1986 - 87 | 140 |
| 1987 - 88 | 150 |
| 1988 - 89 | 161 |
| 1989 - 90 | 172 |
| 1990 - 91 | 182 |
| 1991 - 92 | 199 |
| 1992 - 93 | 223 |
| 1993 - 94 | 244 |
| 1994 - 95 | 259 |
| 1995 - 96 | 281 |
| 1996 - 97 | 305 |
| 1997 - 98 | 331 |
| 1998 - 99 | 351 |
| 1999 - 00 | 389 |
| 2000 - 01 | 406 |
| 2001 - 02 | 426 |
| 2002 - 03 | 447 |
| 2003 - 04 | 463 |
| 2004 - 05 | 480 |
| 2005 - 06 | 497 |
| 2006 - 07 | 519 |
| 2007 - 08 | 551 |
| 2008 - 09 | 582 |
How to find the Long Term Capital Gain
This is a simple, three step process.
Step 1: Find Indexation Factor
You need to take the cost inflation index of the year of sale, and divide it by the cost inflation index of the year of purchase to find the indexation factor.
Indexation Factor = Cost inflation index of the year of sale / Cost inflation index of the year of purchase
In our example, cost inflation index of the year of sale (FY 2007-08) is 551, and the cost inflation index of the year of purchase (FY 1988-89) is 161.
(Do not understand the difference between Financial Year, Assessment Year and Previous Year? Please read "Income Tax (IT) Jargon Financial Year (FY), Assessment Year (AY) and Previous Year (PY)")
Thus,
Indexation Factor = 551 / 161 = 3.42236
What does this mean? This means that the prices have increased around 3.4 times between the years 1989 and 2007!
Thus, the indexation factor tells you how many times the prices have increased between the two given years.
Step 2: Indexed Cost of Acquisition
This is even simpler, and intuitive as well!
The indexed cost of acquisition is actual purchase price multiplied by the indexation factor.
(You need to be logged-in to download the spreadsheet. For free registration that takes less than a minute, please click here. To know the benefits of registration, please click here.)
Thus, in our example,
Indexed Cost of Acquisition = Rs. 2 Lakhs * 3.42236 = Rs. 6.85 Lakhs.
Step 3: Find Long Term Capital Gain
Finally, the long term capital gain is the difference between the sale price and the indexed cost of acquisition.
Long Term Capital Gain = Sale Price - Indexed Cost of Acquisition
Thus, in our example,
Long Term Capital Gain = Rs. 20 Lakhs Rs. 6.85 Lakhs = Rs. 13.15 Lakhs.
It is that simple!
So, what do you do now? Pay the long term capital gains tax on Rs. 13.15, right?
Wrong!
Deducting Cost of Improvements
You can even deduct the various costs incurred by you for periodic repairs of the house from the sale price. And even this can be indexed!
Lets say you spent Rs. 75,000 on repairs of the house in May 1996.
Now, for this,
Indexation Factor = 551 / 305 = 1.80656
And the indexed cost of repair = Rs. 75,000 * 1.80656 = Rs. 1.35 Lakhs.
You get to deduct even this from the sale price!
Long Term Capital Gain = Sale Price - Indexed Cost of Acquisition - Indexed Cost of Improvements
Thus,
Long Term Capital Gain = Rs. 20 Lakhs Rs. 6.85 Lakhs Rs. 1.35 Lakhs = Rs. 11.8 Lakhs.
Neat, isnt it!
Please note that if you have incurred expenditure for improvement of your house multiple times in different years, you can subtract all these indexed costs of improvement from the sale price of the house.
House Purchased Before 1980-1981
The cost inflation index numbers are available starting from 1980-81.
So, how do you find the indexed cost of acquisition for a house bought before 1980-1981?
Well, this is a little tricky.
In such cases, you have to arrive at the Fair Market Value of the house as on 1st April, 1981, and then find the indexed cost of acquisition based on this price.
(You need to be logged-in to download the spreadsheet. For free registration that takes less than a minute, please click here. To know the benefits of registration, please click here.)
Please also read:
- Long Term and Short Term Capital Gain - Income Tax Calculation
- How to save / avoid Long Term Capital Gain (LTCG) Tax on Sale of a House
- "Set Off and Carry Forward of Losses Capital Gains and House Property"
Other articles you might be interested in:
- Long Term and Short Term Capital Gain - Income Tax Calculation
- How to fill Income Tax Return Form 1 (ITR1) - Instructions and Video Tutorial
- The stock market is falling Time to invest?
- Residential / Commercial Property for a Non Resident Indian (NRI)
- An introduction to Hedge Funds
- Banks increase interest rates for deposits and lending (loans)
- Matthews India Fund MINDX: A good proxy to invest in India
- Why does the financial / fiscal year start from 1st April?
- Tata AIG - Maharaksha Accident and Injury Policy
- Provident Fund (PF) and Voluntary Provident Fund (VPF)
- New Ebook Launched: "Investing In Gold - Everything You Should Know"
- More on Systematic Investment Plan (SIP) and Micro SIP
Related links from the web (Sponsored):
Articles by Category:
- Gold
- Income Tax - IT
- India for NRIs and Non Indians
- Insurance
- Investment Philosophy and Planning
- Loans
- Mutual Funds - MF
- News and Developments
- Others and Miscellaneous
- Real Estate
- Stocks - Shares - Equities
Note: Please treat the opinion expressed here as a broad suggestion. Please consult your financial planner / investment advisor before making any investment decision.
Rating
Comments
Add a new CommentThen, you need to use indexation for this value - as if the property was bought in 1980-81 at that price.
Jul 31, 2008
after the sale of the flat, if part proceeds have been used for closure of the home loan of the same flat, can this amount also be deducted from the capital gains ?
Unfortunately, this amount can not be deducted from capital gains.
The interest paid would not be deductible from the sales proceeds.
But the interest paid can be claimed upto Rs. 1.5 Lakhs every year u/s 24.
For more information on this, please read "Income Tax (IT) Benefits of a Home Loan / Housing Loan / Mortgage".
Oct 11, 2008
The best way to calculate the fair market price of the house purchased before 1981 is to utilize the services of a registered valuer.
The value arrived at by a registered valuer is accepted as accurate by the department of Income Tax.
Feb 12, 2009
I am asking this query on behalf of my aunt (Age 69), who is not having any kids.
She is alone and drawing a pension of Rs 6000 pm. Her house built in the year of 1979 with the loan from co-op society for the sum of Rs. 55000. The house went to modifications in 1995 for Rs. 65000 and in 2000 for Rs 100000. She was using the rent collected from the house for Rs 3000, apart from the pension for her livelihood. She is selling the house for rs 20,00,000 and intend to put the money in the bank and planning to move to chennai.
In this case, what will be Long term capital gains? She will not be able to buy a new house, as she is aged. Is there any way she can avoid the tax.
Thanks and Regards
Dattha
Assumption: House was built for a total of Rs. 55,000. House is sold in FY 2008-09.
Let's say the fair market value of the house in 1981 was Rs. 57,000.
Indexed cost of acquisition = Rs. 57,000 * 582 / 100 = Rs. 3,31,740.
Indexed cost of improvement done in 1995 = Rs. 65,000 * 582 / 281 = Rs. 1,34,626.
Indexed cost of improvement done in 2000 = Rs. 1,00,000 * 582 / 406 = Rs. 1,43,350.
Thus, total indexed cost of acquisition = Rs. 3,31,740 + Rs. 1,34,626 + Rs. 1,43,350 = Rs. 6,09,716.
Therefore, the long term capital gain = Rs. 20,00,000 - Rs. 6,09,716 = Rs. 13,90,284.
She would need to pay the LTCG tax on this amout of Rs. 13,90,284.
Saving tax: Yes, she can save this tax even if she doesn't want to invest in a house. She can do this by investing the LTCG amount of Rs. 13,90,284 in certain bonds. For all the details on this, please read "How to save / avoid Long Term Capital Gain (LTCG) Tax on Sale of a House".
Feb 26, 2009
PLEASE ENLIGHTEN ON THE FOLLWING:
1)HOUSE WAS BUILT IN 1975 AT X PRICE HOW TO
KNOW THE FAIR MARKET VALUE AS ON 1981.
2) WHAT IF I DO NOT KOW THE COST OF
CONSTRUCTION OF THE HOUSE AS MY PARENTS HAD
BUILT 34 YEARS BACK.NO RECORDS OF
CONSTRUCTION BILLS. I KNOW ONLY THE COST OF
THE LAND MY PARENTS PURCHASED FOR THE
REGISTERED SALE DEED.
IN SUCH CASE HOW TO CALCULATE THE COST OF ACQUATION.
IS THEIR ANY BENCH MARK BY THE GOVT OF IT DEPT FOR STRUCTURE RATES PER SQ FEET FOR REVELANT YEARS. OR HOW DO I KNOW THE STRUCTURE RATE OF 1991 FIXED BY THE GOVT. AND WHICH IS APPROVED BY IT DEPT. IS CPWD THE AUTHORITY.
PLEASE INFORM BY E-MAIL TO : mehulbpatel@hotmail.com
The best way to calculate the fair market price of the house purchased before 1981 is to utilize the services of a registered valuer.
The value arrived at by a registered valuer is accepted as accurate by the department of Income Tax.
Mar 01, 2009
I am housewife.
1. How much tax i will pay if no investe in bond/other option?
2. Long term capital gain tax is 10% or 20%?
Thanking you.
1. Your long term capital gain after indexation is:
Rs. 8,50,000 - Rs. 3,44,135 * (582 / 463)
= Rs. 4,17,416.
The tax on this would be Rs. 83,483.
2. The rate of tax on LTCG is 20%.
Mar 10, 2009
ashishdwi@rediffmail.com
09827092728
The details given by you are incomplete, so I wouldn't be able to provide an exact answer. But let me try to give you a partial answer.
You bought house 26 years back, so it was bought in 1983. Cost inflation index = 116.
You sold it in 2009. CII = 582.
Indexation factor = 582/116 = 5.017
Cost of house = Rs. 4,00,000
Indexed cost of acquisition = Rs. 4,00,000 * 5.017 = Rs. 20,06,897.
Selling price = Rs. 10,31,000
Brokerage = Rs. 31,000
So, net sale consideration = Rs. 10,31,000 - Rs. 31,000 = Rs. 10 Lakhs
So, capital gain = Rs. 10,00,000 - Rs. 20,06,897 = Negative Rs. 10,06,897
That is, you have a long term capital loss of Rs. 10,06,897.
(Since you have not given the year in which you made the repairing expense of Rs. 1,00,000, I have not added it in the calculation. You can index that cost as well and add it to the indexed cost of acquisition - see examples in this article).
You can carry forward this loss - please read "Set Off and Carry Forward of Losses Capital Gains and House Property" for more on that.
The bank FD and pension plan do not have any impact on this tax calculation. But they can save you some income tax through section 80C - please read "Saving Income Tax Understanding Section 80C Deductions" for more.
I am selling it for 10 lakhs this month.
What is my capital gain?
The calculation needs to be done as described in this article.
Indexation factor = 582 / 497 = 1.171
Indexed cost of acquisition = Rs. 4,68,410
LTCG = Rs. 5,31,590.
Mar 20, 2009
I purchased another flat in Goa and got registered on Nov 2006. I took house loan for this and paid back Rs 5,50,000 in Aug 2009 towards this house loan from the money I received from Bhopal flat.
Please advice what is the capital gain on this amount. How to show this amount for tax return? Should I invest complete amount towards the loan to avoid tax on capital gain? Or invest at other places?
Balakrishnan V
Your indexed cost of acquisition = Rs. 1,20,000 * 582/259
= Rs. 2,69,652
Thus, LTCG = Rs. 6,70,000 - Rs. 2,69,652
= Rs. 4,00,348.
This amount needs to be invested in another house or in an eligible bond if you need to save income tax on it.
(Please read "How to save / avoid Long Term Capital Gain (LTCG) Tax on Sale of a House" for more on this).
Using this amount for prepayment of a housing loan doesn't help you save tax. So, please invest Rs. 4,00,348 for purchase of another house or specified bonds if you want to save income tax on the amount.
Mar 25, 2009
One of the very specific questions I have is around filing this in form ITR-2. In ITR-2, there is section named "Cost of acquisition with indexation". I wanted to understand what can be included under this.
I have the following expenses, Purchase price Registration Rtamp duty Transfer fee Home loan interest.
Also, which of the above entities can be indexed?
Appreciate your responses
Thanks
sandy
Purchase price, Registration, Stamp duty and Transfer fee can be included in cost of acquisition. All these can be indexed.
Home loan interest can not be included here. Benefits of home loan interest are available u/s 24. Please read "Income Tax (IT) Benefits of a Home Loan / Housing Loan / Mortgage" for more.
Mar 26, 2009
You would need to determine the fair market value of the prnaments in 1981 - you can utilize the services of a valuer, or can find out the historic price of gold in India in 1981 through some reports or from some websites.
And yes, you get the benefit of indexation.
Apr 13, 2009
In case I furnish a valuation certificate from a registered valer for the estimated amount spent on such items ,will it serve the purpose .Kindly send your views to me at my email address as well .
Thanks & Regards
Harish
The bills / receipts are the proof that you have indeed spent the amount. You can get a certificate from a valuer about the cot of repairs, but that won't be proof enough that you have spent the money.
Getting a duplicate receipt from the contractor / plumber / carpenter would be much more reliable and convincing.
Apr 24, 2009
I have a doubt. I have brought a new flat on 2005 (brought means agreement) but I got procession only 6months back.
Which category I will fall ? on Short term or Long Term.
Thanks
Lal M.R
There have been differing opinions about the "date of acquisition" of a house.
But if you made the agreement in 2005 and paid the money in full at that time, you can take the date of acquisition as 2005.
May 08, 2009
For saving the LTCG tax, the new property has to be in the name of the person who held the old property.
So, unfortunately, you would not be able to buy the new property in your daughter's name.
May 11, 2009
May 14, 2009
I don't think there is a provision of depositing the amount in an escrow account for investing in LTCG tax saving bonds. Escrow accounts are allowed only when you want to invest in a house.
So, I guess you would have to invest in those LTCG tax saving bonds whose issue is running.
You however have a time of 6 months from the sale to invest in these bonds.
The lock-in period is usually 3 years.
Please read "How to save / avoid Long Term Capital Gain (LTCG) Tax on Sale of a House" for more.
Yes, a valuer should be able to provide you the accurate value of your property as of 2002.
However, please note that for calculation of the capital gain, you would need to consider the value of property when it was built by the person who gifted it to you, and not the value as of 2002.
May 15, 2009
I have a query and am sure you would be able to help me. We sold our agriculture land to various persons and in our sale deed it is clearly mentioned that the said land is not within the municipal limit.
I would like to know
(1). wheather the amount received from such sale is free from capital gain tax
(2). Can we invest this money the way we want for example to buy house, some agriculture land and some commercial space for our work.
Pls advise. I eagerly await your reply.
rgds
ajay
1. It depends on many factors, and not just whether the land was in municipal limits or not. For example, for there to be no capital gains, the land should be more than 8 kilometers from municipal limits. So, more information is needed.
2. If the land is considered as a capital asset (for example, if it is within 8 kilometers from municipal limits), then the taxation would be ruled by section 54B. In this case, you would not have to pay capital gains tax if you purchase another agricultural land within two years of the sale provided you fulfill some conditions.
I would write in more detail about this in a separate article - thanks for a great article idea!
May 26, 2009
As per your examples, I have calculated following after sale of my land:
Cost of acquisition of land on March 1992: Rs. 9000
Amount obtained from sale in May 2009: Rs. 1.63lakhs
Total long term capital gain= Rs. 1.63 lakh- Rs. 9000 x 582/199 = Rs. 1.36lakhs.
Now the question is how much tax I have to pay?. I am an woman, house wife. I have no other income. Should not this gain become part of my total income. ?
regards
You are right - since your income including this capital gain is less than the threshold for paying income tax (that is, you fall in zero tax bracket), you do not need to pay any income tax.
Jun 14, 2009
I have sold it in May 2009 for Rs.26.0 Lacs out of which Rs.9.0 Lacs i have paid as home loan of sold property. I have incurred around Rs.50000 in Nov -05 as a furniture and home improvement/ I have also just now invested Rs.500000/- as a purchase of new property
1) What is the capital gain tax ?
2) I dont have any bills for house improvement is it required?
3) Even after paying Rs.5.0 Lacs for new home, i am taking a loan of Rs.10.0 Lacs and investing total Rs.15.0 Lacs in new home within six month, what will be the capital gain tax in this scenerio.
Jun 14, 2009
would like to know what taxes will i incur for selling a first time bought flat in mumbai within 1 yr of buying.
regards
Jun 17, 2009
Kindly explain.
1. Cost of house is cost as per sale deed = Rs. 10 Lakhs. Calculate the LTCG from this amount as described in the article. Cost of furniture can not be included in the cost of purchase.
2. Cost of furniture can not be included in the cost of purchase. If you have made structural changes, the cost can be included and indexed - but bills are a must.
3. Since you are investing only Rs. 5 Lakhs in a new house (the other Rs. 10 Lakhs is through a home loan), you would get tax benefit only on that much.
From your LTCG, this Rs. 5 Lakhs would be tax exempt, and thus, you would need to pay LTCG tax on the LTCG amount minus Rs. 5 Lakhs.
You would incur a short term capital gains (STCG) tax if you are making a profit on this sale.
If the amount is not reinvested in section 54EC bonds within 6 months, there is not much you can do except for paying tax...
The other option of course is to invest the LTCG in another house by the time you file your IT return, or deposited the amount in an Escrow account if there is a delay in purchase of the new house.
Jun 30, 2009
Yes. The amount of LTCG that you invest in this property would be exempt from tax.
Say this property costs Rs. 10 Lakhs and your LTCG is Rs. 6 Lakhs.
If you invest Rs. 6 Lakhs and your daughter invests Rs. 4 Lakhs, your entire LTCG would be exempt from tax.
But if you and your daughter invest Rs. 5 Lakhs each, only Rs. 5 Lakhs of your LTCG would be exempt from tax. You would need to pay LTCG tax on the remaining Rs. 1 Lakh.
Jul 07, 2009
I own two flats on my name and planning to sell one of the flats which is currently let out (not self occupied).
The question is -
1. If I sell this flat now (July 2009), will it be Long term capital gain?
Key dates -
Date of Agreement/Registration is June 2006
Date of payment of 80-90% amount to builder - Feb 2007 (Loan check given to builder by the bank in Feb 2007)
Date of possession is March 2008
2. If I invest the money gained by selling one of these two flats and
purchase another one with that money, would I get exemption in tax?
3. To save tax, do I need to sell self occupied house only or even sell of non-self-occupied home is also o.k.?
Please answer all these queries.
Thanks & Rgds
Abhay
1. The "date of acquisition" has been a constant point of dispute (and litigation!) as far as taxation of capital gains is concerned!
Usually, the agreement date can be taken as date of acquisition. However, in your case, since bulk of the payment was done a year later, I suspect that the assessing officer (AO) would consider that as the date of possession.
In that case, any gain would be short term capital gain.
2. This is allowed only for long term capital gain. So, if your gain is treated at STCG, you would not be able to save the tax.
3. There is no such restriction.
Jul 12, 2009
1. I WANTED TO KNOW SINCE THE COST OF CONSTRUCTION IS NOT EXACTLY KNOWN TO ME AND SINCE THE PROPERTY WAS GIFTED TO ME, CAN I USE A VALUATION CERTIFICATE FROM A REGISTERED VALUER TO GET THE COST OF THE PROPERTY FOR CAPITAL GAIN CALCULATION? THE PLOT WAS ACQUIRED IN 1982 AND THE BUILDING CONSTRUCTION WAS COMPLETED IN 1992.
ALSO WANTED TO KNOW WHETHER THE VALUATION SHOULD BE FOR 1992 OR FOR 2002 WHEN THE PROPERT WAS GIFTED TO ME.
I REALLY FIND YOUR WEBSITE USEFUL AND HAVE REFERED IT TO MY OTHER FRIENDS. I ALSO USE IT OFTEN FOR MY OWN QUERIES.
THANKS,
ARPITA
1. Yes, you can use a valuation certificate.
2. Valuation should be for 1992.
Jul 20, 2009
Can you please clarify whether we can use Pre-EMI amount under 1.5 lakhs tax exemption?
I am purshing a house with home loan but it will be completed by Jun 2011 (2 years), and bank says that actual EMI will come into picture only after distributing complete loan. Till then I have to pay interest on the amount that is regularly paid out by Bank. They say this pre-EMI.
Can you please clarify?
Regards,
Dhana Prakash
The treatment of pre-EMI interest paid is different from regular EMIs.
Please check out "Income Tax (IT) Benefits of a Home Loan / Housing Loan / Mortgage" and comments below it for all the information on it.
inorder to calculate LTCG of a property [ancestral] acquired before 1981 and sold in 2009, the fair market value of building has to be assessed by valuator as of 1/4/1981. what about the land underneath that building ? HOw to evaluate the cost of land on which building was present and sold?
Aug 12, 2009
First, this site is very impressive.. I refer to this for most of my IT related doubts.
I have one query on LTCG. I am planning to sell my apartment (A) in Dec 2009, this will attract LTCG of Rs. 10 Lakhs. I had booked an apartment (B) under construction in Aug 2008, this apartment will be ready for registration in March 2010. Total cost of this new apartment (B) is Rs. 20 Lakhs. I have been making payments (my contribution is 60% and through Home Loan remaining 40%) for this new apartment (B) since Aug 2008 and will continue till Mar 2010.
My question is can I offset my LTCG of Rs. 10 Lakhs (selling apartment A in Dec 2009) against
(1) the payment (my contribution) I have been making and will continue to make towards my new Apartment(B) under construction
(2) by making pre-payment against the home loan I have taken for new Apartment (B)
Please advise.
Thanks,
Kaku
Aug 13, 2009
Can the LTCG from sale of two houses be non taxable if used for purshase of a Single house ...? Suppose one gets 5 Lacs in each house as LTCG and the new house is 12 Lacs. Will the entire 10 Lacs be non taxable .?
Regrads,
Prasad
A valuer would be able to help you arrive at the value of the building - including the underlying land. (He doesn't find the cost of construction of the building - he finds the cost of the entire building including the land)
Thanks - I am glad you are benefiting from this site...
1. No
2. No
I am sorry, I know this is not the answer you wanted to hear. But the purchase has to be within 1 year before or upto 2 years after the same. Your purchase was 1 year and 4 months before the sale...
I do not believe proceeds from LTCG of 2 houses can be invested for purchase of one new house to claim LTCG exemption of both.
Oct 05, 2009
Please check out "Set Off and Carry Forward of Losses Capital Gains and House Property" for all the details on setting off a loss.
Oct 26, 2009
I had bought a flat in Dec 2004 from an NSE listed builder and paid the entire money upfront.
The building was supposed to be done by Apr 2006 but got delayed.
Eventually I got my flat registered in Aug 2007 by which time a few families had moved into their respective apartments.
I plan to sell the flat in Nov 2009and will this gain short term capital tax since I had already paid the money upfront and I have a letter stating that the flat is due for handover in Nov 2006.
Thanks, Ram
Your confusion is justified. In fact, there are many cases in courts regarding the date of acquisition - whether it is date of payment, date of sale agreement, date of registration or date of actual possession.
However, as a general rule, the date of sale agreement can be taken as the date of acquisition. In case an AO disputes your date of possession, the fact that you paid the entire money in Dec 2004 would help.
Nov 11, 2009
Is short tem capital loss on account of sale of shares adjustable against short term capital gains on account of sale of shares?
Nov 14, 2009
Is the transfer of property liable for capital gain tax.
Regards,
Santosh
Nov 24, 2009
Also for considering the index - it will be year of construction or that for year of gift?
Please clarify.
I am not sure about this. I would believe that it would not be subject to capital gain as she was already a joint owner. However, you should re-check this.
It should be (ii) the estimated cost of construction in 1992 shown by the valuer along with the original price of the plot in 1982.
Considering the index - it would be the year of acquisition of land (1982) and construction (1992) for the respective amounts.
Dec 01, 2009
Thanks
You can calculate the LTCG on sale of your flat as described in this article.
Your house purchase in Pune would qualify under section 54, and would save you tax. Deduct Rs. 12.5 Lakhs and Rs. 50,000 from the LTCG amount that you calculated above - you would need to pay LTCG tax on the remaining amount.
Example: Say you calculate the LTCG amount as Rs. 15 Lakhs. Then, you would need to pay LTCG tax on only Rs. 2 Lakhs.
Dec 04, 2009
will Rs. 3 crore be treated as utilisation of capital gain for the purpose of capital gain.
He then sold two flats immediately after posession for 30 lakhs
How is the capital gains calculated? what is the tax he has to pay?
Dec 23, 2009
Now, my indexed capital gain would be approx Rs. 35 Lakh, but total sales proceeds are 45 Lakh. To offset this gain by buying a house, would I need to buy a house of value upto 35 Lakh, or full 45 Lakh (i.e., would I claim excemption under section 54 or 54F)?
Dec 31, 2009
The interest which I have paid on my home loan during this period of 28 months can be deducted from Short Term Capital Gains or not ? Possession of the flat will be given in March, 2010 and I have sold the flat before registration ( sold the allotment letter ).
Jan 12, 2010
and constructed a structure in 2009 for 150 lakh
and wanted to sell the land + structure for 250 lakhs
current market rate for land in that place is around 50 lakhs
pl guide me for following
what will be the long term capital gain part
and what will be the short term capital gain part
whether i need to sell the land and structure separately ( i.e. with two separate agreements )
how to invest the same to save the tax?
tnx
pramdwara
Jan 15, 2010
Jan 19, 2010
I purchased a plot in the year 1989 for Rs 50,000 and started construction. Another party brought injunction saying that the plot had already been registered on his name and I had to stop construction. I spent around 50000 on construction. The plot was in my possession all these years. A civil case was fought and it took 20 years in various courts and it has come for remand to the lower court last year. I had to hire three advocates to argue my case. Then I felt that it will again take many years. So we came to a compromise and I handed over my registered document and gave up my claim through the court. In return he paid a sum of Rs 7, 50,000. Please advise whether I am liable to pay tax. If so, how much? Please note that I am unemployed for the past eleven years and have no other personal income other than rents from my ancestral house for which i file IT under HUF. please advise.
Feb 05, 2010
Feb 13, 2010
I sold a land for RS 22.0 lakhs. My indexed value of land acquisition is 5.25 lakhs (bought 10 years back). Now I have bought another land for 10.0 lakhs on which I intend to construct a house within next 3 years. I want to invest the remaining amount in Capital Gain Bonds (like REC) so as to offset LTCG completely. Can you guide me as to how much I need to invest in bonds (besides 10 lakhs in new house)? I am a housewife & I have no other income.
Feb 20, 2010
Now I wish to pay back the loan of ANOTHER property purchase 5 years ago at 41 lacs.
However my outstanding is only 34 lacs on the loan.
What would be consider as the appropriate value for consideration of reinvestment of my capital gains, 34 lacs or 41 lacs?
Feb 21, 2010
1. I have purchased a flat and registered it at 41 lacs in sept 2007. I will be getting the possession of the flat in March 2010. Now, if I sell the flat in Sept 2010, for the purpose of CGT, which date will be cosidered as purchase date...i.e whether it will be considered STCG or LTCG?
2. And suppose it is considered as LTCG, then if i service an existing home loan on another property with the proceeds of the capital gain, and if it levels, then should i still be paying capital gains tax?
Feb 23, 2010
I purchased a flat in July, 2003 for Rs 45 lakhs. I now intend to purchase a bigger flat by sale of my current flat and taking loan from bank. I hope to sell my flat for around Rs 75 lakhs, whereas the cost of new flat is approx. Rs 95 lakhs.
My questions are:
1. Am I liable for any long term capital gain, as I will utilize all the proceeds for sale of my flat for purchase of new flat? Please note, I also have another flat.
2. Should the purchase of new flat necessarily be after sale of existing flat or can it be before as well (with support of extra loan from bank/relatives).
Regards,
Suresh Kumar
(Follow Me)
In case the property was purchsed in 1960, then how to go about calculating the capital gain since the index figure starts only from 1980-81?