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Long Term Capital Gains (LTCG) on Sale of a House – Calculation and Income Tax

Sale of a house often results in long term capital gains. But its calculation is not very simple – the cost of acquisition has to be indexed using the cost inflation index numbers. The cost of improvement also has to be added before calculating the capital gain.

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, let’s 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

Let’s say you bought a house in Jan 1989 for Rs. 2 Lakhs. You sell it in Oct 2007 for Rs. 20 Lakhs.

Login Required Download a spreadsheet illustrating the example used in this article, and long term capital gain calculation for many different scenarios.  (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)

What is your profit?

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 wouldn’t 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 doesn’t 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

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
2009 – 10 632
2010 – 11 711

 

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.

Login Required Download a spreadsheet illustrating the example used in this article, and long term capital gain calculation for many different scenarios.  (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)

Indexed Cost of Acquisition = Actual Purchase Price * Indexation Factor

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!

Let’s 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, isn’t 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.

Login Required Download a spreadsheet illustrating the example used in this article, and long term capital gain calculation for many different scenarios.  (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

 

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Comments

  1. Anonymous says:

    [Asked by reader "Gowrishankar" through email]

    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?

  2. Anonymous says:

    As mentioned in the article, if the house has been bought before 1980-1981, then you need to decide the “fair market value” of the house as on 1980-1981 (As per section 55).

    Then, you need to use indexation for this value – as if the property was bought in 1980-81 at that price.

  3. hi,

    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 ?

  4. Anonymous says:

    Dear Kumar,

    Unfortunately, this amount can not be deducted from capital gains.

    • SUPRABHAT MUKHERJEE says:

      ACTUAL LONG TERM CAPITAL GAIN ARRISE 70,00,000/-, NOW I WANT TO INVEST IN TWO RESIDENTIAL BUILDING IN MY NAME 40,00,000 & 30,00,000/-, CAN I WILL BE ELIGABLE FOR EXEMPTION OF LONG TERM CAPITAL GAIN ?

  5. Anonymous says:

    How about the Interest paid to the lending company. Is it deductible from Proceeds of Sale.

  6. Anonymous says:

    Hi Ketan,

    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“.

  7. Anonymous says:

    Hi,

    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.

  8. s k bakshi says:

    You have given a very nice example but kindly explain, in case a house is purchased much before 1-4-1981, then how to calculate fare market price.

  9. Hi,

    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“.

  10. Hello,

    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

  11. Hi Mehul,

    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.

  12. Mehul Patel says:

    LTCG TAX COMPUTATION OF TAX & FAIR MARKET VALUE AS ON 1981

    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

  13. Anonymous says:

    Hi,

    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%.

  14. Om Prakash says:

    i have purchase a land in year 2003-04, in Rs.344135. sold in year 2008-09 in Rs. 850000.00,
    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.

  15. Anonymous says:

    I acquired a property as a gift deed from my sibling in 2005. Fair market value then was 4 lakhs.
    I am selling it for 10 lakhs this month.
    What is my capital gain?

  16. Anonymous says:

    Hi Poornima,

    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.

  17. Poornima says:

    If gold ornaments are gifted by a father to a daughter on her wedding, which took place prior to 1981 or in 1981, and the ornaments are sold today, then how will the capital gains be calculated? Will indexation done for the same?

  18. Ashish dwivedi says:

    mera makan 26 years old hai maine usko 4,00,000/- main liya tha aur 10,31000.00 main maine usko bench diya hai jisme dalali 31000/- aur repairing 100000/- kharch kiya hai mare paas abhi investment – bank fdr 250000/-, hdfc panssion plane 1,00,000/- banki kitna aur invest karna padega aur kaise calculation hoga pls ans me

    ashishdwi@rediffmail.com

    09827092728

  19. Anonymous says:

    Hi Ashish,

    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.

  20. Anonymous says:

    Hi Hari,

    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.

  21. Balakrishnan.V says:

    I purchased a residential flat at Bhopal. Flat was registered at structure stage on 29th December 1994 for Rs1,20,000 Area of flat is 514 sq.ft Flat, was sold in Aug 2008 for Rs 6,70,000

    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

  22. Anonymous says:

    Hi Balakrishnan,

    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.

  23. Anonymous says:

    Hi 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.

  24. I read your articles relating to long term capital gain calculation.

    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

  25. Hi Sir,

    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

  26. Anonymous says:

    Hello Mr. Lal,

    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.

  27. Anonymous says:

    Hi 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.

  28. Long term capital gains provide for deduction of cost of improvemts for arriving at capital gain tax liability .For the purpose of obtaining the benefits for indexed cost of improvement in respect of sale of a residential flat what options are open to me in case I do not have the required receipts or bills in support of expenditure incurred on wood work or sanitary fittings etc.

    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

  29. Sir, Thanks for your response to my earlier question. As the notified bonds may not be readily available at the time of sale, can one deposit the LTCG in the special account till such time a notified bond is available and then draw the amoun t for depositing in the notified bonds?. I suppose one can avoid the LTCG tax by this and is it permissible? What is the lock in period for the LTCG invested in the notified bonds?

  30. Kannan says:

    Sir, What would be the tax treatment if the entire LTCG proceeds are invested in the purchase of a property in the name of my married daughter? Can you still avoid tax or the purchase has to be in my name only, if the LTCG are out of sale of my property?

  31. Dear Sir,

    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

  32. Anonymous says:

    Hi 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!

  33. A house built on a plot of land was gifted to me in 2002 . I sold the property in 2009. Proof of exact cost of construction is not known to me. You have suggested to take a valuation certificate from a registered valuer. Can I take the certificate now after the sale with the present date but the valuation will be shown for 2002. If you have any other suggestion please suggest.

  34. Anonymous says:

    Hi Kannan,

    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.

  35. Anonymous says:

    Hi Arun,

    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.

  36. Anonymous says:

    Hi Kannan,

    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.

  37. Abha Dwivedi says:

    Dear sir,
    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

  38. Anonymous says:

    Hi Abha,

    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.

  39. deepthi says:

    Dear Sir,

    would like to know what taxes will i incur for selling a first time bought flat in mumbai within 1 yr of buying.

    regards

  40. I purchased a duplex @ Rs.10.0 Lacs in May 2005. Rs.10.0 Lacs is sale deed amount and actual price paid by me is Rs.12.5 Lacs.

    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.

  41. I read in many of the above articles that the total LTCG amount has to be reinvested within 6 months. In case this is not done in 6 months, are there any penalties to be paid? How does one go about with completing the formalities.

    Kindly explain.

  42. Anonymous says:

    Hi Chirag,

    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.

  43. Anonymous says:

    Hi Deepthi,

    You would incur a short term capital gains (STCG) tax if you are making a profit on this sale.

  44. Anonymous says:

    Hi Ram,

    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.

  45. Sir, If I invest CG on purchase of a ;property in my name and my married daughter’s name, can CG be avoided?

  46. Anonymous says:

    Hi Kannan,

    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.

  47. THANKS FOR YOUR REPLY. BUT THE ARTICLE ON YOUR WEBSITE DOESNOT FULLY ANSWER MY QUERY.

    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

  48. Anonymous says:

    Hi Arpita,

    1. Yes, you can use a valuation certificate.

    2. Valuation should be for 1992.

  49. Anonymous says:

    Hi 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.

  50. Hi !!
    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

  51. Dhana Prakash says:

    Hi Raagav,

    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

  52. Anonymous says:

    Hi Dhana,

    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.

  53. Hi ,
    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

  54. Hi,

    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

  55. Anonymous says:

    Dear Raagav,
    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?

  56. Hi Polly,

    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)

  57. Hello Kaku,

    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…

  58. Hi Prasad,

    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.

  59. Anonymous says:

    Hi Arun,

    Please check out “Set Off and Carry Forward of Losses – Capital Gains and House Property” for all the details on setting off a loss.

  60. Can I Offset LTCG from sale of property against short term or long term capital loss from stock trading in the same or previous financial year? Or is it that LTCG from property sale cannot be offset against any other head loss?

  61. Hello 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.

  62. Hi,

    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

  63. Hi,
    Is short tem capital loss on account of sale of shares adjustable against short term capital gains on account of sale of shares?

  64. I received a house constructed on a plot as a gift in 2002. The plot was purchased in 1982 and house constructed in 1992. There are no bills for construction but there is a valuation certificate from a govt. registered valuer for the year 1992. The cost of the plot i.e the Fair market value of the plot as in 1992 is much higher in the valuation cert. than that shown in the purchase deed of 1982. For the cost of the house which calculation should we take (i) The fair value of the plot and the estimated cost of construction in 1992 as shown by the valuer or (ii) the estimated cost of construction in 1992 shown by the valuer along with the original price of the plot in 1982?
    Also for considering the index – it will be year of construction or that for year of gift?

    Please clarify.

  65. SANTOSH KUMAR SAHOO says:

    In a family settelement(Divorce), the husband transferred the rights on a house property in the name of wife. The house property before tranfer was in joint name in equal proportion.

    Is the transfer of property liable for capital gain tax.

    Regards,
    Santosh

  66. Hi Kannan,

    Yes, it is.

  67. Hi Santosh,

    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.

  68. Hi Arun,

    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.

  69. nandakumar says:

    sir.I have bought a flat in 2000 at rs.8 lacs ,paid stamp duty rs.35000,renovated at rs.100000 and am selling in dec 2009 at rs.32 lacs.In april 2009 I have bought another house at pune at rs.12.5 lacs ,paid stamp duty of rs.50,000.I wish to know my long term capital gain tax liability considering the puchase of flat before one year and indexation .I wish to invest into REC/NHAI bonds.
    Thanks

  70. Anonymous says:

    Hi Nandkumar,

    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.

  71. A house gifted(ancestral) in 1967 was converted to flats thro a developer in 2009.Out of the total of 8 flats owner acquired 4 flats
    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?

  72. The house was valued by a registered valuer in 1991 for 7 Lakhs

  73. SUBHASH SINGH says:

    i have purchased a house for Rs.4.50 crore in 2008 by financing from bank Rs. 3 crore after that in same year i incurred long term capital gain of Rs 18 crore and repaid Rs. 3 crore loan to bank.

    will Rs. 3 crore be treated as utilisation of capital gain for the purpose of capital gain.

  74. I bought a residential plot(with no house constructed, but in a government approved residential colony) for Rs. 6 Lakh in May 1999, and sold it for 45 Lakh in December 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)?

  75. I have purchased a flat in August, 2007 by availing Home Loan. I sold it in December, 2009 and made a profit of 8 lakhs.
    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 ).

  76. pramdwara says:

    i have purchased land in 1996 for 3 lakh
    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

  77. In case the gold was purchsed in 1970, then how to go about calculating the capital gain since the index figure starts only from 1980-81?

  78. Dear sir,
    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.

  79. manikandan says:

    hi

    My client Sold Agricultural land it is arise the LTCG. he deceided to Reinvested in commercial property here my query is whether it is eligble to claim the exemption reinvested into commercial property or not i need your suggestion very urgent send me your suggestion and related to notes and case laws jmoneykandan@gmail.com

  80. manikandan says:

    hi
    mr.ramakanth

    CII for introduce for the year 1980-81 so basic 100 start only so use the same 100

  81. Hi,

    The information provided is very helpful and easy to understand. Thanks.

    My query:

    Can I include the following under ‘Cost of Improvements’ while computing capital gain:
    a. Cost incurred in making wardrobes
    b. Cost incurred in setting up Modular Kitchen
    c. Cost incurred in changing the flooring
    d. Painting

    Regards,

    Suraj

  82. B.Ramakanth says:

    What is the rate of Inflation for calculating the LTCG for gifted prooperty which was acquired through Gift Deed. after 1980-81 which was purchased by previous owner before 1980-81

  83. Sunil Shah says:

    My father had bought the flat in 1981. If he gifts the same to two sons today. Can the sons sell the same immediately after transfer in their name and buy 2 houses utilizing entire amount received.
    Which will be treated as date of acquisition for Capital Gain Tax purpose?
    The date my father acquired the flat or the date he gifts it to us?

    In short can the gifted property be sold in less than 3 years and not attract Capital gain tax?

  84. Anonymous says:

    Hi,

    I have purchased RESALE Flat at pune in August 2009 at cost of Rs. 7,90,000/- (Agreement value). But government valuation of this flat at the time of agreement is Rs.6,21,000/-
    Now I am selling this flat in March 2010 at cost Rs.12,80,000/- (Agreement Value). But at present government valuation is Rs.12,20,000/-.
    My first query is that for calculating Indexation Factor which value I have to consider – Agreement value or Government value?
    My second query is that which ‘Cost inflation index’ should I refer. Cost inflation index for year 2008-2009 or 2009-2010? For Year 2008-2009 CII is 582 and 2009-2010 CII is 632?
    My calculation is
    Indexation Factor = Cost inflation index of the year of sale / Cost inflation index of the year of purchases
    Indexation Factor = 632/497 = 1.271
    Hence my flat value = 1.271 x 7,90,000 = 10,04,587/-
    My Capital Gain = 12,80,000-10,04,587 = Rs. 275413/-

    Third query is that what are the other expenses I can deduct from above capital gain like Stamp duty, registration etc.?
    Pradeep

  85. I purchased a flat in Bangalore in March 2006 (registered in March 2006). The registered value was 9 lakhs but paid 16 lakhs to builder. Took 13 lakhs loan from bank and paid 3 lakhs from hand. If I sell now for 21 lakhs what/how is LTCG calculated? Will it be based on (21 – 16) or (21 – 9)? I still have 7 lakhs as loan. Will it be considered for deduction as (21 – 7) as sale proceeds?

  86. anil singal says:

    Dear Sir,
    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.

  87. I have sold a property and after calculation my gains (longterm) is 36.5 lacs.

    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?

  88. K.Vijayavittal says:

    I have two queries:

    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?

  89. Suresh Kumar says:

    Hi!

    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

  90. SAATVIK NAGPAL says:

    Sir,
    My father has GIFTED his house to me on DEC.2008, which he has purchased in 1970. Now I sold the house in DEC.2009. My C.A. told me that I will get the benefit of LTCG. but to calculate this
    I will not get the benefit of INDEXATION.
    pls. answer my question I will be thankful to you.

  91. SANJAY NAGPAL says:

    Thanks for the information which is very useful for common person in simple language & in very simple way. Thanks from all readers. Please answer the question of mr.sunil shah
    of 22.05.2010. I have the same question.

  92. Roshni Dayal says:

    Hello!

    I chanced upon your website while browsing the internet in an attempt to find answers to two questions that I have with regards to Long Term Capital Gains. I’m hoping you might be able to help me answer the same!

    (1) My Father purchased a flat in November of 1980 for Rs. 37,100. He nominated my brother as a legal heir to this flat, through both – a Nomination Form which was filed in the Society’s records, as well as in a Will he had made.
    He signed an Agreement of Sale for this flat on 15th October, 2009, wherein the Sale Price was listed at Rs. 41,50,000.
    He sadly passed away on October 17th, 2009, 2 days after he had signed the Agreement of Sale.
    The ‘Closing’ or ‘Deal’ took place on November 3, 2009 – 17 days after my Father’s demise, where the monetary transaction occurred between us, the buyer and the buyer’s bank.
    My question is: In doing my family’s taxes, do the Capital Gains now have to be reported under my Father’s name, or, since my Brother was the legal heir to the flat, does he therefore also become a legal heir to the proceeds received from its sale, thereby requiring that the Capital Gains now be reported under his name?

    (2) I understand the formula for calculation of Capital Gains as:
    Cost Price (multiplied by) Index of Year Sold (divided by) Index of Year Purchased.

    My question is: Should the Cost Price be the EXACT PRICE that is found on the Agreement of Sale in 1980 when that flat was bought, or can I use the Fair Market Value of the flat as on April 1, 1981 in the above formula?

    Truly hoping you can help, and look forward to receiving a response from you at your earliest convenience!

    Thank you in advance for you help on this matter!

    Sincerely,
    Roshni Dayal

  93. Hello Vamdatt
    Your site is very useful and your advise is very valuable.

    I have a question and hope you could provide me feedback.
    Scenario / background:

    #1. Two adjacent plots (“A”, and “B” 240 sq yards each) registered as “ONE unit” in 1991 on Husband’s name in a location P (say on the EAST side of a city)

    #2. In year 2007, Husband has a independent house constructed in Colony B (say on the WEST side of city) — it is registered only on husband’s name.

    #3. Husband decides to develop ONE of the plots “A”, mentioned in #1 above and build G+2 floors (one apartment on each floor) in 2009.

    #4. Municipal corporation advises to split the two plots into two separate entities so that the second vacant plot can be sold without problem.

    #5. Second plot “B” is “gifted” to wife and registered on her name.

    #6 Now, funds shortage to complete the project in 2010. Only Ground floor completed.

    Can the Wife sell the gifted plot and use the sale proceeds for completing the upper floors and save LTCG tax.

    Q2. Do the registration of the “A” be changed to both on husband and wife names to save LTCG?

    Or

    Q3. Can ONLY the Terrace rights on top of Ground floor be changed to wife’s name and use the CG money to finish the upper floors (upper floors registered on her name)?

    /S Rao

  94. Hi,
    I want to buy a house in Jaipur which was allotted to the owner by Housing board in Rs. 4 lacs in 1998 . Now he is demanding 21 Lacs and I will be taking home loan for this. But the owner says that he will only take Rs. 10 lacs through cheque (loan amount) in White money and the rest of the amount i.e. 11 lacs he will take in Cash. He says if he takes more amount in cheque he will have to pay tax. But my problem is that I don’t have so much cash in hand and as a salaried employee I want to pay more through loan. PLS HELP

  95. Rajeev jian says:

    Question
    Property A sold for LT capital gains of 3 lakhs in the name of husband and wife. Property B purchased in the name of husband and father only, for 5 lakhs with wife contributing 1.5 lakhs. what is the capital gains liability of husband and wife? Husband has 2 more residential properties registered in his name as a co-owner of one.
    Regards
    Rajeev JAin

  96. R/S
    I have sold my flat in march 2010 which was purchased in Nov.2004. LTCG gains are deposited in my saving account.
    I want to purchase another flat but i dont got uptil now.Guide me how i can show these gains in return.I dont have another house.I have booked flat with booking amount but registration have not done yet.

  97. We sold our land that was co-owned by wife and self for more than 10 years. Does half of the profit belong to my wife and if so, can I just transfer half of the sale proceeds to her account? how about the calculation of LTCG & payment of income tax (JOINTLY or seperately)

    Thanks

  98. Anonymous says:

    We sold our land that was co-owned by wife and self for more than 10 years. Does half of the profit belong to my wife and if so, can I just transfer half of the sale proceeds to her account? Further to save tax on LTCG, can we purchase separate capital gains bonds with the amount of profit after indexation?
    Thank you.

  99. Vivek Gaikwad says:

    Dear sir, I, purchase a house in 2004 & sold it in 2007 & I purchase new house under LTCG rule i e with in two yeras after selling old property .I want to sale this property with in 1 & half year of purchase, Can I Sell this & what what will be the LTCG

  100. I have an excel sheet for computaion of LTCG.
    How do I send it.
    Instructions
    Only fill the Amt and year in cells which have blue back ground.
    Rest it will do itself

  101. at the onset i would like to appreciate as the information provided by your website is really helpful.
    my query is that our company(pvt ltd) bought a residential house for one of its directors in december 2007 and a sale agreement was registered and 70% of the payment was made (as the property was under construction)the cost was 2,15,00,000 and stamp duty so paid was 11,00,000/- . the possesion was given in september 2008. since then the director is residing there and also perk has been charged in his income tax returns. and no depreciation has been claimed on the flat. now we are planning to sell the flat and a buy a bigger residential flat. my query is whether the asset will be taken as part of block asset and block of assets rule will apply or it will assesed under normal stcg and ltcg rules. and also which date will considered for ltcg whether december 2007 or sept 2008. we have to be doubly sure of the tax implications as we dont want to unnnecsary pay tax just for selling the asset a few months earlier
    regards
    tarun

  102. Hello,

    I would like to know what would be my tax liability in the following case:

    a) cost of acquisition (including indexation) = 8Lakhs
    b) net sale consideration = 10 Lakhs

    LTCG is 2 lakhs. But this is my only source of income. So can I deduct 1.6L from 2L and then pay 20% tax on 40K?

  103. Anonymous says:

    I had purchased a property allotted in 1999. I paid Rs 1,44,000.00 as down payment and the balance in 10 installments every six months alongwith interest on the principle. The total cost of the property was Rs 4,80,000.00 in 1999 but I paid Rs 6,20,000 till I had finished making the payments in Dec 03. I have now sold the property for Rs 53,00,000.00 in Dec 2010. How much capital gains do I have to put in the Capital gains account? If I have to reinvest in property, do I have to invest the full amount or only the LTCG?

  104. Hi

    I have purchased a flat which got registered in Jan 2006 for an amount of 12,59,000. The actual amount I paid to the builder is 20L. Also I have a house loan of 20L and I got receipts for 20L from the builder. Can I consider the cost of Acquisition as 20L?

    Rgds,
    Srini
    Bangalore

  105. Parijat Dutta says:

    what is the date of acquisition of a house property? the date of completion?

  106. (a) Can LT capital gains from sale of a house in one city (purchased in 2001) be used to purchase a parking space in another city and claim relief?
    (b) Calculation of LT capital gains is based on market value or registered sale deed value?
    (c) Can LTcapital gains from sale of a house in one city be used to renovate/ upgrade another house in a different city and claim relief?
    Thanks in advance!

  107. Hello,

    I sold a flat in Aug 2011 which resulted in an LTCG of Rs. 117 lakhs approx. If I invest 50 lakhs in 54EC bonds, the question is, what is My taxable LTCG?

    I was under the impression that the taxable LTCG was simply Rs. 67 lakhs, i.e. 117-50 lakhs. My CA is advising that actually, my taxable LTCG is higher, as per the following formula:

    117 – (50/117)*50 = 96 lakh approx.

    He cites section 54EA (1)(b).

    I simply want to double check if this is indeed the right amount, i.e. 95 lakhs vs 67 lakhs? Please advise.

  108. Mitesh Mulik says:

    Hi ,
    I’m extremely impressed about the excellent advice you offer on this site. I’m quite hopeful of your guidance in my specific scenario, which is as under:
    1). I have bought an apartment flat in 2008 March for Rs.40Lakh (co-owned with my wife), which is currently let out on rent. There is a loan currently on this home.
    2). I intend to purchase a plot of land now (Sep 2011) with a fresh loan. I intend to construct a house on it within next 2 years.
    3). I wish to sell off the let out flat and purchase a smaller flat, and would like to use the surplus amount for prepayment of the plot loan
    4). I presently stay in a self-owned house, which is free from loan.
    My Query:
    1). I there a way I can get exemption from tax on Long Term Capital Gain?
    2). Can I get tax deduction on any of my loan liabilities?

    Thanks in anticipation,
    Mitesh

  109. Deepak Malik says:

    There are brought forward Short Term Capital Loss and in the current year there is Long Term Capital Gain. These can be set off, however if the assessee wishes to take exemption in the current year by buying another house u/s 54, then the net capital gain after set off is to be invested or if the value of New house is more than the long Term Capital Gain before set off then whether short term capital gains can be carried forward.

  110. Pankaj Jain says:

    May I know about the basis of valuation of a house property in the year 1981. Or you can say how should we calculate the cost of construction(Covered area rate) for the year 1981.

  111. My mother gifted her land to me and my daughter in 2009
    We are now selling the plot for about 60 lakhs
    We are buying ahome for 62 lakhs

    Do we need to pay any taxes ?
    Kindly advise

    Thanks

    ravi

    • Arun Nawani says:

      Dear Sir
      I have been reading your articles & find it to be very informative & of great help……..Thank you

      A query,

      I have sold a property on 30th Sept’2011, for a value of 27,50,000, which was purchased on 2nd April 1994 for Rs 3,10,650. Could you please help me with the exact Long Term Capital Gains. Also, incase i do not wish to re-invest the amount in property, what are the best options of capital gains bonds which i should invest in. Finally, I am given to understand, that one needs to open a “Capital Gains” Savings Account in any nationalized bank & park all sale proceeds in the account, until we decide, if we wish to buy a property or invest in bonds.

      Also I want to know if we need to get the valuation of property done ??

      Could you please guide me

      Regards
      Arun Nawani

  112. K.Kailasanathan. says:

    Dear Sir
    I have been reading your articles & find it to be very informative & of great help……..Thank you

    A query,

    To save a tax of 20% on LTCG , It is advised to invest in bonds floated by NHAI and REC etc etc.The amount is locked for 3 years. After expiry of the period how the tax will be calculated?

    Kindly explain me.

    Regards
    K.Kailasanathan.

  113. siddharth Jain says:

    Dear Sir,
    As you mentioned earlier if he property purchased before 1980-81.. need to find out the value of property as on 1980-81 through a registered valuer… my quaestion is who is the registered valuer and from where we found him…where to approach to find out the registered valuer of the houseproprty purchased by grand father and transfer to the son’s

  114. siddharth Jain says:

    who is registered valuer of the house property and from where we approach to get a registered valuer of houseproperty

  115. Hi sir,
    I had purchase one property 1979 for rs 60,000/- 150 yards out of which 90 yards i have to sale for in 2011 for rs. 9.25 lac and i also plan for buying the new proprety worth rs. 8 lac to 9 lac can u suggest me what is the tax liability? and how i will calculate them
    Regards
    abhilash

  116. Please let me know if we can add the stamp duty/ registration fees paid in the cost of construction (acquisition) of flat?

    Also what all can be included in modifications? e.g. New tiles, paining etc is covered?

  117. Please let me know if we can add the stamp duty/ registration fees paid in the cost of construction (acquisition) of flat?

  118. Also what all can be included in modifications? e.g. New tiles, paining etc is covered?

  119. Hello,
    I have purchased land in 1978for Rs.3lacs and now I sell the same forRs 201lacs.To save capital gain taxI want to purchase 3 residential propertie for my kids and one for me and spend
    most of the amount of sale proccedssay Rs.160 lacs and keep the rest with me.
    What will be tax implications as far as long term capital gain tax under Income Tax Rules in Delhi and Banglore?

  120. My father sold one portion of uds with flat on 2010 for Rs. 44 lacs, he bought that land on 1967 for the value of Rs.6000/-. With the proceeds he build a 3 flats and given to his daughters and sons. (by settlement on january 2011). What would be tax reflextion ? In which forms we have to show? All transactions we made through cheque payment. Please advice

  121. I have 2 house (50 l) each in Surat.
    I need to sell these and purchase a flat in Bangalore (60 l) and one flat in (40 l) i.e. I will be re-investing most of the amount of the sale of the previous house in purchasing new property.
    Are there any specific restrictions or conditions that apply to my case?

    Also, can the LTCG be averted even if I purchase a commercial property i.e. a shop

    Thanking you in anticipation.

    Best,
    Avinash

  122. sir my name is raja gopal i need all types of tex’s index like in business sector i.e in cloth, metals (gold,iron, cooper,steel),chits funds,finance and properties (sales and buying tax’s index) and tax deduction methods. and i am living in Eluru (west godavri district ) sir why because i ask these information i want to become
    a accountant. the tax rates are yearly or some times are changed that time how to know that tax index’s please give your suggestions to me i waiting for your valuable reply if u don’t mind sir can you send me your reply to my mail address
    rajagopal_tnv@yahoo.com (if possible )
    thanking you sir

  123. Dear sir, i purchase a plot in Jaipur in Oct.2008 on installment last installment paid in Dec.2011 total amount rs. 255000/- and at present value 550000/- and i purchase a new property in thane date :Oct.2011,amount rs.1500000/- i want to sale my Jaipur property how calculate tax my other income rs350000/- please give me suggestion in tax

  124. I’D PURCHASED HOUSE IN 2004 FOR 9.25 LACS AND SOLD IT IN 2011 FOR 24 LACS. I’D INVESTED ALMOST 1 LAC IN 2004 ON WOODWORK AND ELECTRICAL FITTINGS IN THE SAME HOUSE OF WHICH I’VE LOST THE ORIGINAL BILLS. I’VE NOW PURCHASED A PLOT OF LAND FOR 24 LACS ON WHICH I LATER WANT TO BUILD A HOUSE. I WANT TO KNOW FOLLOWING:-
    1. MY LTCG TAX,IF ANY?
    2. HOW LONG CAN I WAIT FOR CONSTRUCTING A HOUSE ON PLOT OF LAND BOUGHT IN JAN 2012 TO SAVE TAXES?
    3. WHAT IS THE DEFINITION OF A HOUSE? IS THERE A MINIMUM LAID DOWN TO BE INVESTED TOWARDS CONSTRUCTION OF A HOUSE?

  125. my capital gain after indexing comes to 11 lacs, if i invest it in purchase of a new flat will i have yet to pay tax the cost of my house purchased in july 2006 was 7 lacs i have sold it for 21.50 lacs

  126. in jauary 2012 i purchased 1 bhk 662sq.ft.flat in ravet pradhikaran area pune
    total cost is 25,91,000/- i took home loan 15lac for 15 year @10.75 and remaining amont paid by cash and chaques. what is the cost of that flat after 15 years? is it profit or loss?

  127. Hi, pl help. I purchased a commercial plot in 1998 for 1,16,000 Rs. Sold in 2011 for Rs. 50,00,000. Can I invest the proceeds in a house and save on LTCG. I own a house already.

  128. Rahul Chawla says:

    My Grandfather has a house which was alloted to him in 1947 and we are selling that now for Rs 15,00000\- what will be LTCG which we have to pay now as we dont know the value of property in 1981 to calculate the LTCG . Property is situated in Jwala nagar,shahdara,Delhi. Thanks in advance for help.

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