How much tax do I have to pay for selling my house or property? What will be the tax implications for me or my father/mother on the sale of house? What are taxes on selling the inherited property? What is the tax liability on selling a house if my parents sell the house and gift the sale proceeds to me? This article tries to answer questions related to tax on sale of a house.
Table of Contents
Overview of Capital Gain Tax on Sale of House or Property
- The time period: Check the time period between when you bought the house/property and when you sold it. if you have inherited the property the period of holding will be considered from the date of purchase by your ancestors.
- If a property is sold within two years(from FY 2017-18 earlier was three) of buying it, it is treated as a short-term capital gain. This is added to the total income and taxed according to the slab rate.
- If a property is sold after two years (from FY 2017-18 earlier was three) years from the date of purchase, the profit is treated as a long-term capital gain(LTCG) and is taxed at 20% after indexation.
- The Purchase cost and Fair Market Value: If the property is purchased before 1 Apr 2001 then the fair market value of the property as on 1 April 2001 can be considered as the cost of acquisition. For ascertaining the Fair market value, it is best to engage the services of a registered valuer. Our article Fair Market Value: Calculating Capital Gain for property purchased before 2001 covers it in detail
- House improvement cost and transfer cost: While computing the cost of acquisition one can also add the costs incurred with respect to procedures associated with house improvement or transfer cost such as the will and inheritance, obtaining succession certificate, costs of the executor, property valuer etc.
- Find the indexation purchase cost: The long-term capital gain(LTCG) shall be computed as the difference between net sale proceeds and indexed cost of purchase. For indexation, the cost of acquisition should be adjusted by applying the cost inflation index (CII).
- Find the capital gain. Check out our Capital Gain Calculator from FY 2017-18 with CII from 2001-2002
- For short-term capital gain = final sale price – (the cost of acquisition + house improvement cost + transfer cost).
- In case of long-term capital gain, capital gain = final sale price – (transfer cost + indexed acquisition cost + indexed house improvement cost).
- Saving Long Term Capital Gain: If there are any long-term capital gains, one may have to either
- pay tax on it at the rate of 20% or
- Buy a new property
- either 1 year before the sale OR
- 2 years after the sale of the property/asset OR
- The new residential house property must be constructed within 3 years of the sale of the property.
- Save capital gains tax by buying specified bonds u/s 54EC
- Capital Loss: Set off of Capital Losses: The Income Tax does not allow Loss under the head Capital Gains to be set off against any income from other heads – this can be only set off within the ‘Capital Gains’ head. Our article Capital Loss on Sale of House discusses it in detail.
- Long-Term Capital Loss can be set off only against Long Term Capital Gains.
- Short-Term Capital Losses are allowed to be set off against both Long-Term Gains and Short Term Gains.
- Carry Forward of Losses if return is filed before due date: If you are not able to set off your entire capital loss in the same year, both Short Term and Long Term loss can be carried forward for 8 Assessment Years immediately following the Assessment Year in which the loss was first computed. To keep a track of your losses, the Income Tax Department has laid out that Losses for a year cannot be carried forward unless that year’s return has been filed before the due date. Even if it’s a loss return, you do not have any income to show – do file your return before the due date.
On Selling the House or Property
When you sell your house, you are liable to pay tax. Gains or Loss which arise from the sale of capital assets,such as Gold, Debt Mutual Fund and Property etc are subject to tax under the Income-tax Act, under the head Capital gains. The tax paid on this amount of capital gains is called Capital Gains Tax. Conversely, if you make a loss on sale of assets, you incur a Capital Loss. This is explained in our article Basics of Capital Gain
Capital Gains for Real Estate or Property
For Real Estate the computation of capital gains are as follows:
- If a property is sold within two
threeyears of buying it, it is treated as a short-term capital gain. This is added to the total income and taxed according to the slab rate. - If a property is sold after two
threeyears from the date of purchase, the profit is treated as a long-term capital gain and is taxed at 20% after indexation . - If you took property on home loan, claimed the tax deduction for the principal under Section 80C and property is sold within five years, the tax benefits will be reversed. The entire tax deduction ,for repayment of principal component of the home loan ,claimed in earlier years under section 80c , will be considered as your income (in addition to capital gains) in the year in which you sell the property. However, the housing loan interest deduction claimed under section 24(b) won’t be reversed.
Note: From FY 2017-18 onwards: The criteria of 36 months has been reduced to 24 months in the case of immovable property being land, building, and house property.
While you can avail of various tax exemptions in case of long-term capital gains, no such benefit is provided for short-term ones.
Budget 2014 introduced
- An amendment to Section 54EC and from FY 14-15 i.e. AY 15-16 onwards, the investment made by an assessee in the long term specified asset, out of capital gains arising from the transfer of one or more original asset or assets are transferred and in the subsequent financial year does not exceed Rs. 50 Lakhs
- An amendment to Section 54F to be effective from FY 2014-14 i.e. AY 15-16 and as per this amendment the exemption is available if the investment is made in 1 residential house situated in India.
Any money spent on improvement by the seller and the previous owner prior to 1 April 2001(1981) will be ignored. For improvement expenses after 1 Apr 2001(1981), the indexed cost as per the relevant financial year will be added to the cost of acquisition
Short Term Capital Gain = Sale Price - (Cost of Acquisition + Cost of Improvement + Cost of Transfer) Long Term Capital Gain = Sale Price - (Indexed Cost of Acquisition + Indexed Cost of Improvement + Cost of Transfer) Indexed Cost = Cost incurred * (CII of the year of transfer)/ (CII of the year of Acquisition or Improvement)
Capital gain Tax on Sale of House and Income Tax Return (ITR)
For salaried person, If you have made capital gains during the year, you need to fill ITR Form 2, as Form 1 is only for income from salary/pension, one house property and other incomes (excluding from lottery). ITR Form 2, is for declaring income from (sources other than the one declared in Form 1) capital gains, all house properties and other sources (including lottery).
From when does one calculate two three years on buying the property? Will it be from the date of possession or the date of allotment ?
Say one booked a flat in January 2007 and was issued an allotment letter with the floor and flat number. He got the possession on 1 December 2014. If he sells this flat in Feb 2015, how will the capital gain be calculated? Will it be from the date of possession (short term) or the date of allotment (long term)?
Determining the date of purchase of flats under financing schemes is a matter of debate and there are conflicting views on the subject.One view is that while calculating capital gains, the date of allotment is taken as the date of acquisition.By getting the allotment letter, the individual is construed to have received the right to that property; the payment of instalment is merely a follow-up action. Therefore, in your case, the capital gains should be long term in nature on the basis of the date of allotment. The allotment letter should have the details of the flat in the proposed building, your name as the purchaser of the property or one that gives you unconditional rights to dispose of the property.
Sale of a property that is inherited or accepted as a gift will also attract capital gain/loss provisions even though you haven’t spent any money to acquire it. For inherited property, the cost to the original owner will be considered as the cost of acquisition for computing capital gains. If the property has been acquired prior to 1 April 1981, the acquisition cost will be the cost incurred by the original owner or the fair market value of the property as on 1 April 1981, whichever is higher
How is the short term capital gain calculated on sale of house?
Short term capital gain is calculated on difference between the sale and purchase price. Amount of tax depends on the tax slab of person. Current tax slabs are 10%, 20% and 30%. Our article Understanding Income Tax Slabs,Tax Slabs History explains the tax slab in detail. You can try our Capital Gain Calculator with CII from FY 2017-18
I bought a flat for Rs 15 lakh in April 2012 with a home loan and got the tax benefit during 2012-13 and 2013-14. I sold the flat in March 2014 for Rs 22 lakh. What are the tax implications of this deal?
As you have sold the flat within two three years of buying, the gains will be added to your income for the year 2013-14 and taxed accordingly. In the highest 30% tax bracket, the tax comes to roughly 30% of 7 lakh (22 lakh – 15 lakh) i.e Rs 2.1 lakh. If you had claimed deduction for prepaying the principal under Section 80C in the previous years, the tax benefits will be reversed because the property was sold within five years.
You purchase a new house for Rs 15 lakh and claim a deduction of Rs 8 lakh. Now suppose you sell this house after two years for Rs 25 lakh.
The exempted amount will be deducted from the purchase cost for calculating the capital gain in the next five years. As you sold the house within 5 years, the tax exemptions will be reversed. Your actual profit is Ra 10 lakh (Rs 25 lakh – Rs 15 lakh). But as you had claimed deduction which needs to be reversed your capital gain will be Rs 18 lakh = Rs 10 (Rs 25 lakh-Rs 15 lakh) and deductions claimed (Rs 8 lakh).
Long Term Capital Gain and Indexation
The advantage associated with long-term capital gains is factoring of inflation while determining the profit by what is called as indexation . Inflation reduces the value of an asset over time. The concept of indexed cost allows the taxpayer to factor in the impact of inflation on cost. Consequently, a lower amount of capital gains gets taxed than if historical cost had been considered in the computations. To use Indexation multiply the original cost price with a factor that is issued by the Central Board of Direct Taxes. This factor tracks the increase in the general price level, or inflation, and is known as the cost inflation index (CII). It is notified by the central government for every financial year. The Income Tax Act considers 1981-82 as the base year with a cost inflation index of 100. So, the CII for 1982-83 is 109, and so on. Our article Cost Inflation Index from Financial Year 1981-82 to Financial Year 2011-12 covers Cost Inflation index in detail and our article Cost Inflation Index,Indexation and Long Term Capital Gains explains on how to calculate Long term capital gains.
If you purchased your property in 1994 (1994-95) for Rs.10 lakh and sold it (in 2014-15) for Rs.1 crore. Thus, the basic capital gain on this sale will be Rs. 90 lakh, on which the tax charged will be 20% i.e Rs .18 lakh. However, if you apply indexation, the capital gain reduces to Rs 39 lakh, and the resultant tax outgo to Rs 7.8 lakh.
Save Long-term Tax on Property By Buying another property
You can claim tax exemption under Section 54 on the long-term capital gain on the sale of a house. To avail of this exemption, you must
- Use the entire profit to either buy another house within two years or
- Construct one in three years.
- If you had already bought a second house within a year before selling the first one, you could still avail of the tax exemption,
You can also utilise Section 54F to avail of exemption on the long term capital gain made from the sale of land (actually it is any asset other than a house). Again, the sale proceeds should be invested only in a residential property , not a commercial property or a vacant plot of land. However, to avail of this benefit, you should not own more than one house.
If you sell the property deduction under Section 54F/EC is on the gain allowed . But if you sell let the entire sale proceeds are invested in a new house or used to build a new house. If you use a part of the money, the deduction will be the proportion of the invested amount to the sale price.More on it is given in our article Capital Gains Account Scheme and Sale of property
Capital Gain Account: Save Long-term Tax on Property when you do not buy another property
But what if you don’t want to buy a property at all with the capital gain (LTCG) amount? You can still get tax exemption. The long-term capital gain tax can also be saved under Section 54EC if the capital gain is invested for three years in bonds of the National Highways Authority of India and Rural Electrification Corporation Limited within six months of selling the house. However, you can invest only up to 50 lakh. More on it is given in our article Capital Gains Account Scheme and Sale of property
I am selling one of the two houses I own. Can I avoid the capital gains tax by depositing the proceeds in the Capital Gains Account Scheme (CGAS)? Can the CGAS deposit be withdrawn within a year to buy another house or is there a lock-in period?
There are two types of CGAS accounts: Type A is akin to a savings account, while Type B works like a fixed deposit. You can open an account with any leading PSU bank. However, the deposit in CGAS is only an interim measure to help you avoid long-term capital gains tax in the year that you sell the asset. The actual liability can only be avoided by either purchasing or constructing another house within the mandated time period. The Type B CGAS has a soft lock-in period similar to any fixed deposit. Hence, premature withdrawals may attract a penalty. There is no such restriction in Type A accounts. However, long-term capital gains tax will have to be paid on all deposits in the CGAS that are not utilised after three years of the initial deposit. Any withdrawals from CGAS are usually permitted only after filling up a form, which expressly states the purpose of withdrawal. The money must be utilised for the stated purpose within 60 days of withdrawal.
Long-term Capital Gain for NRIs
According to the latest amendments in the Income Tax Act, the residential property bought to re-invest long-term capital gain on sale of property must be situated in India. If one wants to buy house located in the US, he needs to pay tax on the capital gain portion of the sale proceeds. This gain is calculated after reducing the inflation indexed cost of the property from the sale proceeds. You can also deposit the capital gain amount in the capital gains account scheme of specified banks, and purchase a house in India within two years or construct a house within three years. This amount, if unutilised for the said purpose, becomes taxable in the third year of the sale of the original property.
References: Income Tax Information Series How to Compute Capital Gains (pdf)
Buying a House,Renting,Home Loan,Tax,Selling,Capital Gain
- On Selling a house
- Cost Inflation Index Up to FY 2016-17 and New Cost Inflation Index from FY 2017-18
- Basics of Capital Gains
- Capital Gains Account Scheme and Sale of property
Hello sir,
Me and my wife jointly bought a Residential property Of Rs.25L in September 2017 in which I took loan 18L from bank. Now in October Iam planning to sell this property around 50L.
My question is sir.
1. Remaining loan balance is around 13L , and if we buy another residential property of 25L within a year of sale .
Now after repaying 13L loan, 12 L is with me, we can buy bond. But do i have to pay tax on 13L (loan amount) which will be 2.6L @20% of 13L..
Or can I save this tax . Waiting for your valuable feedback.
Thanks
While there is no lock-in period for deduction claimed against interest payment on home loan under section 24(b) or 80EE, the section 80C(5) (relating to repayment of principal) of the Act stipulates that if you sell your house within 5 years from purchase or date of possession, the deduction claimed on principal repayment during previous years gets revoked. In this case, all the deductions claimed for home loan principal repayment under section 80C during the previous years too have to be clubbed together and added to income of the year of sale, and be taxed accordingly.
Let us assume you had bought a house in May 2014 with a home loan, and had claimed about Rs4 lakh under section 80C over the last 3 financial years—FY2014-15 to FY2016-17. If you sell the house now, the entire Rs4 lakh claimed earlier as deduction under section 80C will get added to your income for FY2017-18 and you will have to pay tax on the total income as per the income tax slab applicable to you.
Sir
I have purchased a plot for 4 lakhs in 2006 and constucted a house in 2011 with 28 lakhs, the present market value estimated at 1.2 cr. If I sell the property what are mye tax liabilioties, of the sale proceedings I want to buy one house at Rs. 30-40 laks. Please reply.
If a married lady (aged around 55) receives any amount (say,above 10 lacs) as a part of the sale proceeds of her very old ancestral house with land (in cash or by any means, what will be her own tax liability ? Given that the lady is a housewife and no income of her own is there. If her husband is a pensioner, then shall there be any clubbing of income for him and how ? Please clarify.
You have to find out how much of the money you received is capital gain which depends on when the house was bought and house was sold.
There will be no clubbing of income.
a common practice to invest in the name of non-earning family member(s), who could be either spouse, parents, children or others. The understanding is that doing so will help the investor avoid tax on the earning from such investments. However, as far as income tax is concerned, while the rules allow an individual to invest her income in the name of other family members, any income earned on those investments has to be added to her income. This is called clubbing of income, and is covered under section 60 of the income tax Act.
Say a person buys a residential property and gets it registered in the name of non-earning spouse. Later, the property is let out. In such a case, rental income from the property will be clubbed with the income of the earning spouse, or with that person’s income who has actually funded the property purchase, irrespective of whose name it is registered in. Similarly, if you invest in a fixed deposit in your minor child’s name, interest earned on the amount invested will be clubbed with your income. However, in case the income of an individual includes income of her minor child, she can claim an exemption under section 10(32) of 1,500 or the income of the minor so clubbed, whichever is less.
This really informative and helpful. Great blog by the way and thanks for sharing this useful information on how to calculate capital gain on sale of house.
I have inherited a house from my father in 2016 and the house was built in 1983 for amount of approximately Rs 2.5 Lacs, currently the value of this house is Rs.1.5 crores minimum and i want to sell the house for two reasons :-
1. for my sons US education – Part funding around Rs 1.0 Crore
2. the remaining proceeds for my personal investments in FD or mutual funds for retirement.
How can i reduce any long term capital tax impact and the ways of avoiding them as i would like maximum corpus for my retirement.
Appreciate your advice in this matter.
First, you need to get the Fair Market Value for the house as on 2001. Because Indexation starts from 1 Apr 2001.
Capital gains are not applicable when an asset is inherited because there is no sale, only a transfer. However, if this asset is sold by the person who inherits it, capital gains tax will be applicable but purchase date would be of original buyer not date of Transfer.
Fair Market Value: For properties purchased before 1 Apr 2001, the latest cost inflation numbers start from 1 Apr 2001, one needs to first arrive at what is commonly known as Fair Market Value (FMV) of the property as on April 1st, 2001. Our article Fair Market Value: Calculating Capital Gain for property purchased before 2001 explains it in detail.
This will help you to get the Cost price. Then this price would be indexed so Cost price would become more.
Selling price would be around 1.5 crore.
Long Term Capital gain is 20% on the difference between Sale price and Indexed Cost price.
The resultant LTCG could be claimed exempt from tax if the gain is re-invested in a specified manner.
One such reinvestment that qualifies for the exemption is the purchase of government-notified bonds (to the extent of the LTCG) within 6 months from the sale of the property)
The another alternative available for claiming exemption from long-term gains tax is by re-investing the sale proceeds in another property within prescribed timelines.
1. My father purchased 300 Sq. land in Hyderabad in the year 1968 yds for Rs 10,000/-
2. Constructed ground floor in 1969 and 1st floor in the year 1971 ( Total Sft constructed 3500/- both G+1st floor)
3. My father expired in 1993 leaving a will stating ground floor to my brother and 1st floor to me.
4 My brother expired in the year 2014 leaving wife and 3 daughters.
5. We want to sell the house which may fetch between Rs. 1.75 to 2.00 crs.
6. My self and my brother have incurred some expenses from 1993 to 2014 in renovation, repairs and also paid yearly Municipal taxes. Do all these expenses qualify for deduction from the capital gains tax. Further we be may pay some brokerage for towards sale of house.
7. Please let us know how to calculate capital gains tax for me and my brother’s wife and how to avoid the tax.
Please reply.
regards
ramakrishna
sir my mother aged 75 bought 2 residential flats in Apr 2014 out of Chennai city. she sold it in May 2017 and invested entire consideration by purchasing a single residential at proper city in May 2017 itself. can she claim exemption for sale of 2 house against purchase of single house.
Yes she can
if a house owner sells multiple properties and invests the proceeds in a new house, he is eligible to get a deduction of capital gains tax benefit.
One of my client has bought land for Rs. 3,20,000/- of 4000 sq. ft. in Apr-2002 and he went to joint venture the same in 2009. In the joint venture the total building built area is 15,100 sq. feet. The property has been divided 8758 sq.ft. for others(investors) and 6342 sq. feet for my client(only land). Out of this 6342 sq.feet I got the 4 two bedroom flats and one three bedroom flat and have an excess sq. feet of 607. For this 607 sq.feet the builder gave money Rs 2000/- per sq.feet. But, he never gave to my client the money and he used all of this money for the building materials to build the my flats such as Tiles, Teak wood doors, shelves , electricity works, and fans etc. After finished construction the property value is Rs. 85.62 lacs in 2009 for my client of 4 two bedroom flats and one three bedroom flat. Now, he is decided to sale his 1 nos. three bedroom flat which is 1950 sq.ft. and guideline value Rs. 63.37 lacs. So, my question is how would we calculate capital gain tax for this? because, he bought land in 2002 and he went to joint venture 2009. is this joint venture can treated as expenditure cum sale of a part of property or sale cum buying of property? kindly help me, which is correct and what is the correct capital gain tax amount?
I have two houses, one received as gift from my elder brother 8 years ago and another house received as gift from my mother in 1989. I constructed first floor by availing home loan from office on the house I received from my mother. Now I want to sell both the houses and with the sale receipts I want to buy a flat. Kindly advise how I can save LTCG tax. If any amount is taxable, how much tax I have to pay.
As the purchase happed more than 2 years ago you have Long term capital gain.
You need to calculate your capital gains
If there are any long-term capital gains, one may have to either
pay tax on it at the rate of 20% or
Buy a new property
either 1 year before the sale OR
2 years after the sale of the property/asset OR
The new residential house property must be constructed within 3 years of the sale of the property.
Save capital gains tax by buying specified bonds u/s 54EC
Steps to find Capital Gains are
The Purchase cost and Fair Market Value:
If the property is purchased before 1 Apr 2001 then the fair market value of the property as on 1 April 2001 can be considered as the cost of acquisition. For ascertaining the Fair market value, it is best to engage the services of a registered valuer. Our article Fair Market Value: Calculating Capital Gain for property purchased before 2001 covers it in detail
House improvement cost and transfer cost: While computing the cost of acquisition one can also add the costs incurred with respect to procedures associated with house improvement or transfer cost such as the will and inheritance, obtaining succession certificate, costs of the executor, property valuer etc.
Find the indexation purchase cost: The long-term capital gain(LTCG) shall be computed as the difference between net sale proceeds and indexed cost of purchase. For indexation, the cost of acquisition should be adjusted by applying the cost inflation index (CII).
Find the capital gain. Check out our Capital Gain Calculator from FY 2017-18 with CII from 2001-2002
whether I have to pay capital gain tax on a property sold on 03.01.2018 in the FY 2017-18 if I am constructing a residential house within one year at 22 lakhs.
Dear Sir,
Your article and replies are exhaustive and highly informative but I need to know my query as it is not covered above threads. I have a property in Delhi. I am intending to sale a part of it and build a house on the rest of the area (by demolishing the old structure fully).
The plot was bought in 1971 & the house was built in 1985 (no proofs/receipts of expenses on construction is available with me now). My queries are:
1. How will the LTCG be affected and will I get any benefits for this construction?
2. What proof does the IT dept need for the new construction part(as the same builder will do both i.e. buy, register his part and construct new for the same amount, no money being given or taken)?
I hope you will resolve my issue and advise as early as possible since your all advice are quite exhaustive and prompt in guiding in resolving LTCG issue. If possible kindly email the response or inform when the reply is put on your blog. I am a senior citizen, if that is relevant. Thanks.
Recently I sold my flat. As per the agreement the cost of registration & stamp duty at the time of sale was born by me (seller). I have also paid for similar expenses at the time of buying the property. Can I deduct expenses incurred on stamp duty & registration both – at the time of buying & selling property for my capital gains calculations
Hi, I have 3 flats and all 3 are registered on my name and my wife name.
1st flat is purchased in Aug 2014, 2nd flat is purchased in Nov 2015, and 3rd flat purchased in Dec 2015.
Now I want to sell 3rd flat purchased at 26.3 Lakhs and after adding registration cost and CII it came to 30Lakhs. and I am about to sell at 40 Lakhs
Please guide me how to save maximum tax.
As it is 3rd property, Can I purchase new property in 2 years and get incometax excemption?
Should I put only profit in Capital Gain account or whole amount(left after homeloan)?
Can I add ‘interest on homeloan’ (if I didnt get tax excemption in previous years) as the cost of improvement or flat cost?
Woodwork can be shown as the cost of improvement or flat cost? Any bills should be produced? I dont have any bills now.
As it is registered on my wife name and she dont have any income, If I show half of the profit as her income, will I get any tax excemption?
If so, as I got 10 Lakhs profit, can I claim 2.5Lakhs as her income and can I invest 7.5 Lakhs in NationalHighway Authority of India or Rural electrification Corporation Ltd?
Using our Capital Gains calculator Your Long Term Capital GainTax with indexation (at 20%):157480.31 Detailed calculations are shown below.
So you have a profit of around 1.5 lakhs only. With these calculations does your investment idea change?
As your wife is not working she cannot claim Long term capital gain.
Under Section 54, you are exempt from paying LTCG tax if you buy a new house either 1 year before the sale of the old property or within 2 years of selling it. If you are planning to construct a new house, this should be done within 3 years of sale of the old property. You can get an exemption on the entire capital gains, or up to the cost of the new residential property, whichever is lower. So in the above example, if you buy a new house at a cost of Rs. 10 lakh or more, you will not have to pay any LTCG tax.
If you are not able to invest the specified amount in the manner stated above before the date of tax filing or 1 year from the date of sale, whichever is earlier, deposit the specified amount in a public sector bank (or other banks as per the Capital Gains Account Scheme, 1988).
Investment Type:Real Estate
Time between: 2 years 131 days
Gain Type: Long Term Capital Gain
Difference between sale and purchase price: 1000000
CII of the Purchase Year: 2015 month: Aug : 254
CII of the Sale Year: 2017 month: Dec : 272
Purchase Indexed Cost:3212598.43
Difference between sale and indexed purchase price: 787401.57
Long Term Capital Gain Tax with indexation (at 20%):157480.31
From 1 Apr 2017 Long-term Capital Gain on Real Estate is after 2 years
my mother bought land 1.16cents on 1964 cost 20000/- my mother settelment given as 3 part to my barothers an me on 2006 cost 176000/- now i am selling my part now cost 1,30,00,000/-
what is my tax please explain
If i buy a house in 2013 for rs. 8 lakh and in 2017 i sell the house for rs. 16 lakh by check then how much ammount of tax i will pay?
Using our Capital Gain Calculator from FY 2017-18 with CII from 2001-2002 Assuming you bought after 1 Apr 2013.
Before 1 Apr 2013, it would be in the earlier financial year.
Long Term Capital Gain Tax with indexation (at 20%):122181.82
Difference between sale and purchase price: 800000
CII of the Purchase Year: 2013 month: Apr : 220
CII of the Sale Year: 2017 month: Apr : 272
Purchase Indexed Cost:989090.91
Difference between sale and indexed purchase price: 610909.09
Long Term Capital Gain Tax with indexation (at 20%):122181.82
Sir,
I had purchase a land of 6.6 decimal at Rs: 2 lakh
in the year 2002 and taken a housing loan of Rs: 4 lakh in the year 2003-04 and constructed a house
of 1700 sqft within that year , in which i incurred a total cost of Rs: 12,00,000. But I have no proof of the cost. Now I am going to sell the house , so how the cost of the house will be decided in calculating the capital gain, that is my question. Please help me by giving the answer of this question.
Thanking you,
Dilip Sinha,
Jhargram, W.B.
I have sold my ancestral property which was in our possession before 1st April 1981.How can I save Capital Gains Tax if I don’t want to buy new property?Can I invest in Capital Gain Bonds of NHAI or REC even after six months of the agreement date?
Yes , you can invest in capital gain bonds, only the capital gain from sale needs to be invested and not the entire sale value. Also note that the investment has to be made before 6 months from date of sale or before the financial year ends. There is a limit of 50 Lacs max, so if you sell in Jan you can invest 50 Lacs in that Fin year and another 50 lacs after 1st april to get total 1 cr investment done. Interest at present in NHAI is 5.25% pa and is fully taxable.
I have sold my ancestral commercial property which was in our possession before 1st April 1984. How can I save Capital gains tax if I don’t want to buy new property?Can I invest in Capital Gains Bonds upto 1 year?
I have recd all consideration of sale in the f.y 2015-16, but the deed of conveyance made during f.y 2016-17, in which year capital gain will be computed.
Dear Sir,
I have an plot of land which is ancestral property. If I enter into an agreement with a developer to construct apartments in this plot and I get 30% share of the apartments , how will Capital Gains be calculated when I sell an apartment?
I have bought a flat in fy 2015-2016. Now I am selling a plot I own and plan to use the money for repayment of the housing loan I have taken for the flat. Can I save tax on long term gains in this transaction .
Thank You.
Hi,
I have bought a flat on 31st October 2016. I’m trying to sell my 9 year old flat and is not sold yet till 20th December 2016.
Is there a way I can still avail tax exemption?
If i have to pay tax on capital gain, which is better option 10% or indexed tax?
Pritam
dear sir pl let me know my tax liability ie capital gain .i purchased a house from dda in 1987 @2.78 lakhs +regd 29000+MISC20000+ IMROVEMENT 130000. I AM NOW 72YRS iam selling it @2600000. what is my capital gain tax. how can isave i have one more house in my name . pladvice thanks kumar gandhi
Hi
Presently I own 6 residential villas which i had purchased in the year 2009. I have clients who are interested in buying the same, however i am not sure how much taxes i will be liable to pay after the sale.
I had a word with my CA to inquire if i will be eligible for Long term capital Gain, however he says that i have been filing returns as a Real Estate investor and as such long term capital gain is not applicable to me. Can you please shed some light on this matter
If i sell all the units for a combined price of rupees 45000000 and the cost of acquiring the property was rupees 20000000, then what wud be the tax liability for me.
Sir I am constructing a house . construction started in Nov 2015 (last year ) with bank loan. I have another property (land) and am planing to sell it. Can I claim for tax exemption. How ? If it is taxable how it is calculated ?
Sir i have a house in south Dehli built in 1955.now I want to sell it now I am getting two storeys and 50 lacks rs what will be the tax on it
My age 38, my dad purchased one house in Tamil nadu on 2011 worth rs. 7 lacs including registration and brokerage.we spent 5 lacs for construction. Now (2016 )he is going to sell for 16.5 lac including brokerage. Do my father have to pay tax, if yes how much. Can he invest the money which he will receive in DD in FD in centralized banks.
Hello sir,
The ariticle is really useful.I have below query
I have puchased the property in Aug 2012 with 16 lakhs + 1.5 lakhs stamp duty + 10000 maintenance charge
I have taken 22lakhs of housing loan for this.
Now iam selling this property in Nov 2016 for 28.6 lakhs.Currently i have home loan balance of 19.77 lakhs which is in fixed IR so bank is charging me 2.3% extra which means 20.3 lakhs needs to be paid in total.
Could you please advice how much capital gain tax will be applied for me and suggest me whether investing this 12.6 lakhs(28.6 – 16) in capital gain bonds is good for tax exempt.
I have got tax exempt on 2 lakhs of homeloan principal amount till now.So how this will be taxed now?
The property will be treated as long term, cost of acquisition – 17.5 L will be indexed from 2012-13 to 2016 -17. Sale consideration will be 28.6 L. In order to avail exemption you could buy a new property or invest in the capital gains bonds of NHAI or REC. For help contact us on support@taxache.com
Sir
I HAVE one specific query , we have a house in chennai , about less than 2400 sf ft land and 900 individual house , bought in my father name with his and my earnings and with co operative loan now fully paid in 2000 , i have one elder sister and younger brother who hand not contributed in the construction , now it has been transferred to my mothers name after my fathers death in 2003 and now she wants to sell and give equal shares of 25% and split it four ways
I have a larger share as original contributor and what is my legal stand on the same and what will be the capital gains tax in my hand if i get 25 lacs as my share, PLs let me know the details to my mail id panchu.s@gmail.com
Regards
Panchu
Chennai
I had sold my old house in Aug,2011. My long term capital worked out to Rs 1.07crores. I had booked new flat on 11th July,2011 which was under construction by paying 2lacs as earnest money. Allotment letter Dt 11th July,2011 was issued to me by builder.The total cost of new flat was Rs 1.05 Crores.Sale deed agreement was signed with builder in Dec,2014 i.e Registration of agreement. Balance amount i had paid in instalment till March,15 and got possession of flat in August,15.As per income tax AO i am not entitle for Capital gain benefit as per section 54 of IT Act. As per AO i had paid only 2lacs as initial payment and got allotment letter. Rest i had paid in instalment. Secondly i have done registration of flat in Dec,2014. As per AO Allotment letter would represent only right to purchase a flat. As per AO i will be entitle to own property only after registration of property & stamp duty paid by me and not by mere allotment letter. I had appealled aginst AO order. As on today my case is with Commissioner of IT Appeals. He wants to know whether similar case has gone in favour of assesse in IT Tribunal or in Appelent body or high court or supreme court. Sir, is their any case laws where Assesse had paid initial booking amount of Rs one lac to 5lacs & took allotment letter from builder. Balance amount has been paid in 3 to 4yrs time. Requesting you to help me in quoting cases similar to my case gone in favour of Assesse like me.
I booked a flat in Dec 2009 Which I have registered in Dec 2010, And builder giving me Possession in Aug.2014 Now I have sold this Flat in oct. 2016. Am I eligible for long term capital gain tax or Short term capital gain tax. also flat purchase price 963000 Rs and sold price is 1850000 Rs so how much tax i pay
suppose i sold a house for ₹1,00,00,000 acquired in the year 1999. Cost of acquisition after indexation is ₹70,00,000. hence capital gain is ₹30,00,000. So i have to invest capital gain amount whether purchasing a new house or u/s 54EC. what is the treatment of the remaining 70,00,000 which remains from sale proceedings received after investment u/s 54F and 54EC.
Sit my mother owned a property bought in 1987-88 for 56,000 and then sold it on 2016-17 for 38,00,000. The money (in advance of the sale) we received for the sale was invested to buy a property in my (her son’s) name in 2013-2014. Would she be exempt from the capital gain tax? If yes, how can we declare in her IT return?
Hello Sir,
We got the new house in 1992 in replace of old rent house at Rs.1,50,000. I am now planning to sell that property. How my purchase price will get calculated?
Hi,
Thanks for the detailed article. I have few queries regarding STCG from sale of plot in gated community :
1. What’s the date to be considered for calculation of LTCG/STCG ? Is it date of signing Sale Agreement with Developer or the date of registration of plot ?
2. When I originally bought the plot, I paid total
PP (purchase price) = BP (base price) + SD (Stamp duty) + REG (registration) + M (Maintenance for 3 years) .
Now I am selling it at SP (Sale price), so is this correct ? :-
STCG = SP – PP ? i.e. In STCG calcuation, does cost of purchase (acquistion cost) include registration fee , stamp duty , maintenance paid by me already when I purchased the plot ?
Hello sir
I have finalized purchase of purchased of a land on June 2015. Payment is being made in installment, final installment being due in Dec 2016. Registration will also be done post final payment in Dec 2016. House would be constructed on said land by Dec 2017 considering lead time for construction. By when latest should I sale my current house in order to avail exemption under long term capital gain. ( ( Most likely sale of house would be in July 17 ) .
See, LTCG in case of Property can only be claimed when asset is held for atleast 3 yeras from date of purchase and you must be knowing this
Now in case of constructed properties, question is what can be date of purchase/Aquisition. There are various views with respect to consideration of date of acquisition be it Date of advances OR registration of deed OR date of allotment letter.
Practically and logically if you go , then I would suggest that you go with date of allottment letter issued to you , as it gives right to buyer in property inform of conveyance and it becomes assets in hand of buyer as per IT Act.
So, Consider 3 Years from date of allotment letter issued to you and you can sell based on that to claim exemption u/s 54 of It Act.
Hi
We had a piece of land the price of which was 3500. This was in 1935.
My grandfather built a two storey house on it the exact cost of which can only be ascertained from the maps.
I sold half of it in aug 2015 for 23750000. I also have entered into an agreement of purchase of a flat for 7800000 in feb16
What would be my max cap gain liability
Sir,
if i had purchased a plot 11years ago and constructed a residential house on it …..Now 2 years back(and not before 1 year) I purchased a new plot and want to sell the old residential house so that I can construct a residential house on the plot I purchased. Tell me how to calculate the capital gain tax now and the exemptions I can claim.
Waiting for your reply sir.
Hello,
My mother purchased and registered a house in Bangalore in her name in 1995.The value as per sale deed was Rs.2,50,000 approximately.
She died in 2014 leaving behind me and my sister as the only heirs(my father had died in 1994). In 2015, we transferred the house into our joint names with all the other documents like Khata etc.
On 19th August 2016, we sold the house for Rs.23 Lakhs and split the money equally.
Questions:
1) It is a inherited property but transferred to our names only in 2015. Will it attract STCG or LTCG ?
2) I had purchased a qtr acre farm land in Tamil nadu in 2008 with the intention of building a small farm house but could ot do so due to lack of funds. Now can I build the farm house with my portion of the sale proceed and avoid capital gains ? Is it allowed to use the money for a farm house instead of aa apartment or a dwelling unit ?
3) If for some reason , I do not build the farm house with this money how do I save on capital gains ?
Thanks,
The asset will be treated as LT, however, from the point of indexation, indexation will be availed from the 1995, when the asset was first held by the previous owner and not from the date when you inherited it ( CIT Vs. Gautam Manubhai Amin (Gujrat High Court)).
In order to avail exemption of the capital gains on sale of house. Sec 54 exempts if the captial gains is invested one year prior or with 2 years for purchase of any house property or complete construction of a house property with three years from the date of transfer.
In such case, u can purchase bonds of NHAI or REC. However, it has a upper ceiling of 50 L in a financial year.
For help contact us on support@taxache.com
Sir,
When a newely developed property (a flat) is purchased one has to pay development charges , electrical meter charges, Society formation charges and such other charges. Does all these add on charges also become part of the Flat cost while computing capital gain in the event of selling that flat? Please inform how to arrive at a purchase cost of flat.
Thanks,
KS
please answer for the above query
Dear Sir
Thank you for your blog. It desrves a round of applause.
Hoping you would find time to teply to below query:
– I purchased an apartment in 2010 posession in jul 2011 for 40Lac
– Purchased another flat in 2015 posession in Dec 2015 for 1 cr. Both on SBI housing loan.
– My current house will fetch 70 Lac but process will take 3 months to complete from now.
– I will deposit all funding in housing loan OD account. Would I need to pay Capital gain tax? What amount?
– Also planning to buy commercial property and may use some amount from money received. Do I need to pay capital tax? How much?
Eagerly awaiting your reply.
Thanks…
Sir,
From what we have understood is you would be selling your current house.
Which one is your current house, when did you buy it?
capital gains come when you sell your assets like jewellery, house etc.
How much capital gain would come depends on when you bought the house and when you sold it.
If you are selling within 3 years of buying the house then it is short term capital gain and taxed as your income slab.
If a property is sold after three years from the date of purchase, the profit is treated as a long-term capital gain and is taxed at 20% after indexation .
If you took property on home loan, claimed the tax deduction for the principal under Section 80C and property is sold within five years, the tax benefits will be reversed. The entire tax deduction ,for repayment of principal component of the home loan ,claimed in earlier years under section 80c , will be considered as your income (in addition to capital gains) in the year in which you sell the property. However, the housing loan interest deduction claimed under section 24(b) won’t be reversed.
You can claim tax exemption under Section 54 on the long-term capital gain on the sale of a house. To avail of this exemption, you must use the entire profit to either buy another house within two years or construct one in three years. If you had already bought a second house within a year before selling the first one, you could still avail of the tax exemption
Such capital gain exemption is reversed and the amount taxed as capital gain if the new property is sold within three years of the date of purchase/construction. This profit will be considered a short-term gain and taxed at the normal slab rates, not the 20% beneficial rate
You can also utilise Section 54 (F) to avail of exemption on the long-term capital gain made from the sale of any asset other than a house. Again, the sale proceeds should be invested only in a residential property, not a commercial property or a vacant plot of land. However, to avail of this benefit, you should not own more than one house.
Hello Sir
In June 2015 i sold my house for 38 Lac, and i bought another plot within 2 month but i took that on my wife name and construct house on that plot.
Now i have no money left with me. So do i have to pay LTCG.
Thanks
A small plot and house was inherited 5 years back. The house was constructed in 1999. However, the construction cost is unknown. In such a case how can one compute capital gains, if one sells the property and house.
Thanks.
I have purchased a property in 2012 dec at Rs 2550000/- and i want to sale it at RS-5000000/- At what rate i have to pay tax&how much capital gain is condidered is there any chance to save the tax by applying tax indexation
The following is the calculation of LTCG Tax after indexation.
you have not mentioned the correct financial year of sale.
Index of financial year 2012-13 has been taken for calculation
Calculation of LTCG
Cost of acquisition x Index of the year of sale 2550000 * 1125
Divided by Index of the year of acquisition 852
Indexed cost of acquisition = 3367077
Particulars Amount
Full value of consideration (i.e., Sales consideration of asset) 5000000
Less: Expenditure incurred wholly and exclusively in connection with transfer of capital asset (E.g., brokerage, commission, advertisement expenses, etc.) . 0
Net sale consideration 5000000
Less: Indexed cost of acquisition (*) 3367077
Less: Indexed cost of improvement if any (*) 0
LONG TERM CAPITAL GAIN 1632922
LONG TERM CAPITAL TAX @ 20% 326585
Dear Sir, I have a question. I have 2 residential houses, If I sell one
of them after 4 years of purchase and invest this LTCG on another
residential house, Is this LTCG is exempted under section 54?
Yes LTCG tax exempted provided that entire profit amount is used to buy another house.
How does one inform to IT Department about sale proceeds of a house. I sold house in April 2012 which was purchased in 1990 & had purchased 54EC bonds & had paid CG tax on balance amount from sale proceeds (taking into account indexation). Kindly suggest did I miss anything which I must have done to inform IT Department about sale of house?
Dear Sir,
Kindly reply my post which was posted on July 23, 2016. Thee query is reproduced here for your convenience.
How does one inform to IT Department about sale proceeds of a house. I sold house in April 2012 which was purchased in 1990 & had purchased 54EC bonds & had paid CG tax on balance amount from sale proceeds (taking into account indexation). Kindly suggest did I miss anything which I must have done to inform IT Department about sale of house?
Hi,
I purchased property for 32.5 lac that was under construction in Jun 2011. I paid 29 lacs in Jun 2011 and the remaining 3.5 lacs in Aug 2014 when the project got completed. If I sell the property now (Aug 2016) at 52 lacs would the capital gain of 19.5 lac considered a short term gain or long term gain?
Also I believe if I invest this 19.5 lac money in capital gain account scheme then I would be exempt from the income tax is this correct?
I doubt whether it is Long Term Capital Gain.
LTCG is calculated on Cost inflation index of the year of transfer of capital asset.
Capital Gain Account Scheme is meant for LTCG.
Please check.
I am afraid that u have to add STCG in your income for that financial year.
You may at lease to complete 36 months from transfer of capital asset to you.
Dear Sir
I sold a house property in FY 2015-2016 and used the proceeds to buy another house property in FY 2016-2017. While filing the return for 2015-2016, can I claim exemption as the buy transaction took place in FY2016-2017 or can this exemption be claimed only when the return is filed for 2016-2017?
Appreciate your guidance
Regards Krishnan
did u invest the money in a capital gain scheme ?the rule says—- If you are not able to invest the specified amount before the date of tax filing or 1 year from the date of sale, whichever is earlier, deposit the specified amount in a public sector bank (or other banks as per the Capital Gains Account Scheme, 1988).
so to save tax u should have had either bought the 2nd property before the tax filing date of fy 2015-2016..if you did not do that, then u would have had to put the entire sale money in a capital gain scheme account from where one can withdraw anytime within 2 years to buy the 2nd property OR 3 years if u plan to construct. if u did not do either of the above, then you might have to pay capital gain tax…….though do confirm with a CA.THANKS
I want to know the tax implication when: my father sells one property of his and I sell a property of mine and use the combined proceeds to buy a bigger property in joint names. What happens to any excess amount remaining out of the sale proceeds after the purchase.
Sir,
How to treat taxation for a home which was constructed by self ? Example – Plot of Land bought in year 2001. and construction done over a period of FY 2012-2013, last payment towards construction made in March2013. If this home is sold in April 2017 –
1. Will this be treated as LT capital gain ?
2. If yes – can amount spent for each FY be indexed separately using respective CII ?
Thank you.
Tthe capital gains on the transfer of land and building should be bifurcated and the assessee should be given the benefit of exemption in respect of long-term capital gain from the transfer of land which happened to be a long-term capital asset.
So you can split the cost of land and building and use different CII for calculating long term capital gains
You can read Capital Gains on sale of land and building thereon can be computed separately for land and building for more details
Sir,
My mother purchased a flat in 1979 for Rs.1 Lakh and she expired in 2011 and I sold the flat in November,2015 for Rs.38 Lakhs. What is the implication of capital gains tax which I have to pay to the government. Can I save the tax by investing in some govt.scheme. Regards
My mother purchase a plot in 08/2000 at a cost of Rs. 60000 + Rs. 4800 Stamp duty. She built house on it. And now in the year 2016, she had sold the house in Rs. 3500000 (35 LACS). Can she give the money to me for purchase of a residential plot amounting to Rs. 35,00,000. Whether there will be any LTCG Tax liability. If so, on whom and how much. How can the LTCG be exempted.
I bought a property for Rs 1600000 and sold it for Rs1700000 in the same FY 2015. The property was co-owned by someone. So we both had 50-50 share in it. Now while filing my ITR 2, in capital gains section, Full value of consideration for me will be taken as Rs1700000 or Rs 850000 (half of 1700000 as I had only 50% share in it)? Similarly Value of acquisition will be Rs 1600000 or Rs 800000 for me?
One more thing that Can I include registration charges of property incurred while purchase in the expenses incurred section in ITR2?
My capital gain is Rs 15 Lakhs (prrox.) and so that tax will be around Rs 3 Lakhs. Can I buy a vacant residential PLOT to claim exemption please ? PL. send me the reply through e-mail at the earliest. Thanks.
If you buy plot the new residential house property must be constructed within 3 years of sale of the property/asset.
Overview of Exemptions is as follows:
The Income Tax Act has laid out exemptions under Section 54 and Section 54F to help taxpayers save tax on capital gains.
(1)Exemption under Section 54 is available on long-term Capital Gain on sale of a House Property.
(2)Exemption under Section 54F is available on long-term Capital Gain on sale of any asset other than a House Property.
To reiterate, both the exemptions are available only on long-term capital gains.
Common requirements between the two Sections:
A new residential house property must be purchased or constructed to claim the exemption
The new residential property must be purchased either 1 year before the sale or 2 years after the sale of the property/asset.
Or the new residential house property must be constructed within 3 years of sale of the property/asset
If you are not able to invest the specified amount in the manner stated above before the date of tax filing or 1 year from the date of sale, whichever is earlier, deposit the specified amount in a public sector bank (or other banks as per the Capital Gains Account Scheme, 1988).
Only ONE house property can be purchased or constructed.
Starting FY 2014-15 it is mandatory that this new residential property must be situated in India. The exemption shall not be available for properties bought or constructed outside India to claim this exemption.
Sir, I sold a flat (bought long back in the 80s) in July 2015 and opened a separate fixed deposit account in a Bank with the amount received. Now,I don’t want to buy any property with the money. Kindly let me know how much tax will i have to pay and what is the formula of calculating tax in this case.Will be waiting for your reply.
First your Capital Gain should be Long Term Capital Gain.
Secondly, full LTCG is invested in purchase of plot within prescribed time limit.
Dear sir,
sold my flat in mumbai for 1,27,50,000 on 20.04.2015
Date of Purchase/Possession : 04.05.2008.The cost of acquisition is rs 30,35,000.
I have invested the proceeds in buying new flat which is still under construction. The possession will be given somewhere in Oct 2018. Could you please let me know what will be my tax liability and how to reduce or plan my tax outgo.
The agreement of the said flat is in the joint name of my wife and self.
Currently i am unemployed and I do not have any taxable income.
Thankyou very much for your time.
sir, i had purchased a plot for rs 8 lacs in 2011,but at that time , circle value for that plot was rs 17 lacs. now i am selling that plot for rs 24 lacs(circle value)
i want to ask whether cost of acquisition will be 8 lacs or 17 lacs, and what will be my capital gain ?
Dear nidhi
First you have purchased property in 2011 and selling in 2017 so it will be covered in long term capital gain.
Budget 2013 has amended the proviosions of clause Vii of sub section 2 of section 56, and as per this amendment if any buyer purchase any house less then cicle rate and difference is more then Rs 50000, then differential value should be added in income from other sources. This is effective from ist April 2014. But in your case you have purchased house in 2011. so it wont be applicable. cost of acquisition will be 8 lac.
For more details you can reach me at email ID given below:
casunnynarang@gmail.com
9937089860
Sir, I am a senior citizen. We have purchased a flat in the year 2004 for Rs.12.00 lakhs and we now wish to sell it for Rs.60.00 lakhs approx. in which case what would be our tax liability and also how can we get the max. exemption.
Assuming you bought flat between Apr 2004 – Mar 2005, you have a capital gain of 6,37,500. If you bought it between 1 Jan 2004 to 31 Mar 2004 it would be 6,16,846.65 as CII of FY 2003-2004 has to be taken into account.
Investment Type:Real Estate
Time between :12 years 156 days
Gain Type: Long Term Capital Gain
Difference betweem sale and purchase price: 4800000
CII of the Purchase Year: 2004 month: Apr : 480
CII of the Sale Year: 2016 month: Sep : 1125
Purchase Indexed Cost:2812500
Difference between sale and indexed purchase price: 3187500
Long Term Capital Gain Tax with indexation (at 20%):637500
You can claim tax exemption under Section 54 on the long-term capital gain on the sale of a house. To avail of this exemption, you must
Use the entire profit to either buy another house within two years or
Construct one in three years.
If you had already bought a second house within a year before selling the first one, you could still avail of the tax exemption,
You can also utilise Section 54F to avail of exemption on the long term capital gain made from the sale of land (actually it is any asset other than a house). Again, the sale proceeds should be invested only in a residential property , not a commercial property or a vacant plot of land. However, to avail of this benefit, you should not own more than one house.
If you sell the property deduction under Section 54F/EC is on the gain allowed . But if you sell let the entire sale proceeds are invested in a new house or used to build a new house. If you use a part of the money, the deduction will be proportion of the invested amount to the sale price.
Dear Mrs Nair,
You have purchased house in 2014 and selling in 2017 means selling house with in three years and will be covered under short term capital gain. In short term capital gain there is no exemption limit.
but if you sell the house after 3 years then it will be covered under long term capital gain. Under long term, there are sections where you can get exemption by investing profit amount in residential house under section 54.
if you need more details please note down my email ID :
casunnynarang@gmail.com
Firstly, let me commend you for writing this blog. Taxation in all it’s myriad rules and regulations can be taxing indeed; thanks for giving information which gives us atleast the basic idea.
I have 2 questions.
1) A relative (an NRI) wants to sell his property which he bought back in 2006. For calculating the inflation indexed cost/purchase price, can he include the taxes (more specifically the registration fee and stamp duty) in the purchase price. Or would it just be the agreement cost.
2) Are the stamp duty and registration fees subject to inflation index?
Thanks
While calculating capital gains, expenses related to transfer / sale like advertisement expenses, brokerage expense, Stamp duty, Sale deed registration fees, Legal (lawyer) expenses etc., can be deducted from the Purchase price. Then purchase price used for indexation.
Rules of selling property For NRI are as follows:
Long term capital gains are taxed at 20% and short term gains shall be taxed at the applicable income tax slab rates for the NRI based on the total income which is taxable in India for the NRI.
TDS Deductible
When an NRI sells property, the buyer is liable to deduct TDS @ 20%. In case the property has been sold before 3 years from the date of purchase a TDS of 30% shall be applicable.
How to save tax on capital gains?
NRIs are allowed to claim exemptions under section 54 and Section 54EC on long term capital gains from sale of house property in India.
Coming to stamp duty
Mr. Kumar purchased a house in May, 2004 for Rs. 84,000 and sold the same in April, 2015 for Rs. 10,10,000. He also paid brokerage of Rs. 10,000. What will be the taxable capital gain in the hands of Mr. Kumar?
Computation of capital gain will be as follows :
Particulars Rs
a Full value of consideration (i.e., Sales consideration of asset) 10,10,000
b Less: Expenditure incurred wholly and exclusively in connection with transfer of capital asset (E.g., brokerage, commission, advertisement expenses, etc.). (10,000)
c Net sale consideration (a-b) 10,00,000
d Less: Indexed cost of acquisition* (1,89,175)
e Less: Indexed cost of improvement if any nil
f Long-Term Capital Gains (c-d-e) 8,10,825
LTCG Tax (f x 20%) 1,62,165
Sir,
I am selling a plot for Rs 60 lakhs which I brought it for 30 lakhs, the person is registering it for 45 lakhs. The sale agreement will show 60 lakhs and he is taking bank loan with this agreement, but the sale deed will show only 45 lakhs. I am already purchasing a flat for Rs 1.0 cr can I show the sale agreement of the plot for IT for taking the advantage of capital gains and all transaction are through bank only. Request advice, is sale agreement a valid document.
Hi, Forgot to mention In my previous post.
The cost of acquisition of my sold flat is 30,35,000.
Thanks
Hi,
I sold my flat in mumbai for 1,27,50,000 on 20.04.2015
Date of Purchase/Possession : 04.05.2008.
I have invested the proceeds in buying new flat which is still under construction. The possession will be given somewhere in Oct 2018. Could you please let me know what will be my tax liability and how to reduce or plan my tax outgo.
The agreement of the said flat is in the joint name of my wife and self.
Currently i am unemployed and I do not have any taxable income.
Thankyou very much for your time.
sir,
if i have a piece of land with building since ancient time. that land was acquised by land acquisition office in july 2012. payment of land and house are 1500632 and 978924 respectively. both payments was paid in f.y. 2012-13. i received full amount and construct a new building till july 2013. costing of construct new building was 1875000 approx.
Please tell me if there is any tax applicable.
sir,
if i have a piece of land with building since ancient time. that land was acquised by land acquisition office in july 2012. payment of land and house are 1500632 and 978924 respectively. both payments was paid in f.y. 2012-13. i received full amount and construct a new building till july 2013. costing of construct new building was 1875000 approx.
Please tell me if there is any tax applicable.
Capital Gains come when you are selling your land/house.
If you have not sold the land/house it would come as Income from House property. Our article Income from House Property and Income Tax Return explains it in detail.
i booked a flat in 2006. Not yet delivered . If i shall willfall under long term gain or sgort term gain.
It would fall under Long term Capital gain.
sir kindly clarify the following:
Actually i want to sell my residential house. can i buy commercial property in that money? Is it possible?
You can buy commercial property but not save Capital gains by investing in commercial property.
A seller can save entire tax outgo if he or she uses proceeds equivalent to long-term capital gains for buying a new house located within India within one year prior to the sale date or two years from the sale date. If the property is under construction the time period permitted is three years.
The amount used for buying a new property is exempted from tax and if there’s any balance, it will be taxed at a flat 20 per cent (plus cess and surcharge). If you are not immediately buying a house, this money needs to be kept in the Capital Gains Account Scheme (CGAS), and withdrawn within the stipulated timeframe.
If you don’t want to go for a residential property, you can still save LTCG tax by investing in specified bonds issued by the National Highways Authority of India or Rural Electrification Corp (under section 54/54EC) within six months from the date of sale. These bonds have a lock-in period of three years. Also, the seller can only invest a maximum of Rs 50 lakh in these bonds, while you have to pay tax on the remaining amount.
Sir, I got a share in my ancestoral property in chennai . my share is 907 sq. ft. flat in 7100 sq.ft. We the family members propose to construct the apartment by availing homeloan. I got home loan sanctioned for 20 lacs and other registration charges , margin amount , regisgtration chargeds and obtaining power connectiion , it will come to around 27 lakhs.
I would like to dispose this 907 sq.ft. now. I may get around 60 lakhs as per market rate. Please, advise me how much i have to pay as tax. or shall i invest in anycapital gain tax bond which is not taxable.
further advise me how the capital gain tax will be calculated in my case as i am incurrring some 27 lakhs as expenditure..
I want to dispose the property , since my wife is already having a home loan. I am also a co-applicant in that case.
expecting ur reply
asokan 9444120271
Sir, I got a share in my ancestoral property in chennai . my share is 907 sq. ft. flat in 7100 sq.ft. We the family members propose to construct the apartment by availing homeloan. I got home loan sanctioned for 20 lacs and other registration charges , margin amount , regisgtration chargeds and obtaining power connectiion , it will come to around 27 lakhs.
I would like to dispose this 907 sq.ft. now. I may get around 60 lakhs as per market rate. Please, advise me how much i have to pay as tax. or shall i invest in anycapital gain tax bond which is not taxable.
further advise me how the capital gain tax will be calculated in my case as i am incurrring some 27 lakhs as expenditure..
I want to dispose the property , since my wife is already having a home loan. I am also a co-applicant in that case.
expecting ur reply
asokan 9884357580
I bought a residential property X in 2006-2007 for 22 lacs. I bought another residential property Y in 2012-2013 for 19 lacs. Now I want to sell property X for 170 lacs in 2016-2017 out of which the long term capital gains is 125 lacs so can I invest this amount to buy another residential property to save tax?
I have a plot in my name and want to take loan on it and also want to invest the capital gain amount of my father gain from sell of land how it is possible
I have a plot of land held jointly with my brother in Gurgaon. We bought it over 10 yrs ago for approx 20L. Now we want to sell, approx price is 4 Cr. Some questions on avoiding LTCG:
– Can we purchase a joint property again say for 3 CR and avoid LTCG as long as all other criteria of the section are met. KEY point is – can sale of joint property be invested in purchase or joint property and still qualify?
– I have just bought a flat in Mumbai for which payment have already been made starting 1/11/15. The flat will take 5 years to be ready. If we sell the above land say 2 yrs from now – can i invest proceeds in this property and avoid LTCG?
– If I have allotment letter of this property dated 1/11/15 – can the amounts paid in this property going back 1 year from the sale of land be counted as investment into new property for avoiding LTCG ?
Thanks for our expert advise in advance.
I have a plot of land held jointly with my brother in Gurgaon. We bought it over 10 yrs ago for approx 20L. Now we want to sell, approx price is 4 Cr. Some questions on avoiding LTCG:
– Can we purchase a joint property again say for 3 CR and avoid LTCG as long as all other criteria of the section are met. KEY point is – can sale of joint property be invested in purchase or joint property and still qualify?
– I have just bought a flat in Mumbai for which payment have already been made starting 11/1/15. The flat will take 5 years to be ready. If we sell the above land say 2 yrs from now – can i invest proceeds in this property and avoid LTCG?
– If I have allottment letter of this property dated 1/11/15 – can the amounts paid in this property going back 1 year from the sale of land be counted as investment into new property for avoiding LTCG ?
Thanks for our expert advise in advance.
Please suggest,
I am in need of a housing loan.
My plan is to construct a small complex on our land. To construct a complex, I won’t get a housing loan.
What i have thought of is buying our own old home with housing loan and pay money to my dad. That way money stays with me and I can utilise it for constructing complex.
The house I would purchase from my dad is an ancestral property over 25 years old. I would purchase it for 25-30 lakhs depending on the loan I receive from Bank.
I would invest the whole money in building complex, the land again is on my dad’s name.
I would just want to know the amount my Dad and I would loose in tax and registration of sale deed of my old house. And also if its a good idea to persue.
If my dad & I loose 20% of my housing loan in buying my own property that won’t be a good idea. I would anyways inherit that property some day. And again there would be ccost of registration as a purchased property.
I am really confused what should I do? I want ti construct this complex very badly, I am just not getting a proper suggestion. And as I work for a bank, Housing loan is the only way. I will not get a commercial loan.
I welcome your suggestions.
Thank you in advance
Sir
My wife purchased a house in 2007 on he own name for Rs 12.5 lacs and sold it now at Rs 45 lacs . Now if we buy a house on my name and her name for 45 lacs then can this long term gain be offset against the new purchase
needed this badly
Hi All,
I have made a house 10 years back and now I want to sale it. Do I need to give the tax for that or not?
Thanks
Rahul
If you make a profit on the sale of house then yes. You need to calculate indexed price of the house. And then find difference between indexed price and sale price.
Ex:If you purchased your property in 1994 (1994-95) for Rs.10 lakh and sold it (in 2014-15) for Rs.1 crore. Thus, the basic capital gain on this sale will be Rs. 90 lakh, on which the tax charged will be 20% i.e Rs .18 lakh. However, if you apply indexation, the capital gain reduces to Rs 39 lakh, and the resultant tax outgo to Rs 7.8 lakh.
I built a house in 1990 including the cost of land for Rs. 4.5 lac. If I want to sell it during 2016. Will you please let me know as to how much income tax on capital gain I will have to pay. Is there any mean to reduce this tax on capital gain.
With thanks.
Parmjit Singh
we have Ancestral property which my mother inherited in 1995, and due to the diplation state of the building, decided to enter into a 50-50 Joint venture, in Oct 2003, to demolish and reconstruct. the builder constructed 2 blocks of 4 flats each. with one block handed over to my mother and the builder sold all the 4 flats in the other block [between may – Jul 2005].there was no cash transaction between my mother and the builder. In Oct 2014, my mother settled 1 portion/flat in my name. and i had sold the same in July 2015. only documents we have is the sale deed that my mother signed when 4 builders flats were sold.
for computation of LTCG, please let know, if i can consider the sale price of the flats sold by the builder as the cost of acquisition/cost of Improvement, of the 4 flats my mother had and thereby compute the cost per flat.
or should i only consider the Fair market value of 1981.
I had purchased a land in the year 2004 amounting Rs150000.00.Now I want to sell it for Rs 900000.00.My question is I want to utilize sale proceed in construction of my first floor along with bank loan.Whether I am eligible for capital gain tax under section 54(F) or I have to pay 20% on difference of index price.
I have sale my flat less than rate prescribed by Maharashtra government.which price did i consider the actual one or prescribe for calculating capital gain tax
can my father use the capital gain from a sale of residential property for the repayment of my home loan.Is there any tax liability on me or my father
I got this web site from my buddy who shared with me concerning this
web site and at the moment this time I am visiting this website and reading very informative
content at this place.
Hello,
My Father has brought one home in 1992 at cost of 100,000 Rs and sold in 2016 Jan at 20,50,000 Rs.
How much tax he is payble now?
We brought one new home(Agreement is registered on my name, my wifes name and father – Total 3 owners of the flat) at 35,00,000 Rs out of which 28,00,000 rs i have taken as home loan and 7,00,000 Rs is my own contribution.
How can we his taxes?
I booke my flat on February 2011. Then I applied for loan from IDBI bank. IDBI sanctioned 1975000 as loan. First part payment to the promoter by IDBI bank was made on August 2011. For the next one year I only paid the interest.not the Principal. After one year I started to pay EMI. But I took tax benefit for the financial years 2011-2012,2012-2013,2013-2014,2014-2015. I got possession on November 2013. The cost of my flat was 24,64,400/- excluding the registration cost and extra cost. The total cost including all the cost raised to 29lakhs(approx). But now I am selling my flat at 26lakhs. The valuation of the flat at present is more that 39lakhs. Do I need to pay Income tax?
I had purchased a Flat in 2005 and had booked another Flat in Feb-2013 from a builder. The Flat booked shall be ready in July 2016.
In the meantime, I have sold the earlier Flat in Aug-2015.
My question is whether I can claim exemption on the Capital Gain Tax on account of the new Flat Booked?
Need a response urgently.
Thanks in advance.
If a property is sold after three years from the date of purchase, the profit is treated as a long-term capital gain and is taxed at 20% after indexation. The indexation of purchase price helps to reduce the net capital gain, thereby slashing the tax burden for the seller. As you purchased Flat in 2005 and sold in Aug 2015 your gain is long term capital gain.
When you sell your house, you are liable to pay tax . The tax paid on the amount of capital gains is called Capital Gains Tax. The sale proceeds will be calculated on the basis of the valuation adopted by the state’s Stamp Duty and Registration Authority and will not be the amount mentioned in the deed of conveyance.
Purchasing Another Property : The Income tax act allows exemption on capital gains to the extent these have been invested in purchasing a new house property.
You have to invest the amount of capital gains and not the entire sale proceeds.
The sale proceeds should be invested only in a residential property, not a commercial property or a vacant plot of land.
You should not own more than one house and in India (from AY 2015-16)
You can claim tax exemption under Section 54 on the long-term capital gain on the sale of a house by using the entire profit to either buy another house within two years or construct one in three years.
Now catch is date for buying new house would be Feb 2013 or Jul 2016. this depends on the interpretation by Assessing officer. There are loopholes in interpretation of law. You verify with your tax consultant or CA.
Sir,
I need help..
I hv purchased flat in dec 2004 for 5L and selling the flat in February 2016 for 22L.
At the same time purchasing a flat for 75L, out of which I am taking loan of 70L, and remaining amount want to spent from the flat sale.
Other remaining amount I want to spent for self.
Could you pls help to identify if I need to pay any incomtax or what is my situation.
Thanks in advance….
How is the purchase date of property determined ?
I have made 100% payment for the property by RTGS in Jan 2015. But I have not yet registered the property(it is new property fully ready for occupancy) nor have I taken the posession of the property.
Suppose I eventually register the property in my name and take possession in Jan 2017, and sell the property in Jan 2019( 4 years from making full payment and 2 years after posession)
In this case will I paying long term or short term capital gains ?
It is very important to find out the date of purchase of the property because it is this date which will determine the nature of Capital Gain namely whether the Gain is a Long-term Capital Gain or a Short-term Capital Gain.
There is lot of confusion.
To save your Capital Gain Tax, the Sale Deed or the Purchase Deed would be the valid document to determine the date of purchase or the date of sale. However, when the property is purchased in instalments, the letter of possession will be the date for such purpose. Finally, the answer will depend on the facts and circumstances of each case.
Some say that Date of allotment is to be taken as date of purchase. And when you register the property date of possession is taken as date of purchase.
If you go through the article Tax on Sale of Under Construction Property, Indexation & Benefit U/s. 54 / 54EC you would get reference to cases.
Sir I purchased property in 1997 & sold in 2015, at the time of buy the value is 4,40,000/- & take the benefit under 80 c upto 2002 & sold for Rs.15.61 how much will be tax.
Excellent article!
However, I need clarification for the following case
We (my mother, my brother and myself) sold the property about 6 months back that was in the name of my late father. Can I and my brother utilize the proceeds to repay the loan of property (a) whose possession has been taken (b) whose possession is due within 6 months. Also can our mother forego her share?
Also, can the sale proceed utilized to meet expenses on account of registry of property, electricity and water connection charges etc. ? In other words, do these components get counted in the cost of property being purchased
Question is: property was in whose name – was it name of your father? Was there a will which gave the rights of property to you.
For example Mr Arora purchased a property on 1st August 2004 for Rs 75lakhs. Neha inherited this property from her father in 2012, however she decides to sell this house. In May 2014, Neha sold this house for Rs 1.8 crores. In this case, cost for calculating Neha’s gain shall be Rs 75 lakhs and the cost shall be indexed since it’s a long term capital gain. For the purpose of indexation, the CII for 2004-05 shall be considered. Therefore cost for calculating capital gains for Neha shall be Rs 75lakhs x CII of 2014-15/CII of 2004-05 = 75lakhs x 1024/480 = Rs 1.6 Crores. Therefore net gain for Neha is Rs 20lakhs. Do note that the date or year of inheritance are of no importance in this calculation.
If you all have inhertited the property then you have to calculate the capital gain and divide it by 3 if inherited equally or in proportion to what you have inherited.. Your mother can gift her capital gains to any adult child without any tax obligation. Capital gain is 20% of difference between indexed cost and selling price.
You each have to add capital gains to your total income .
You can save the capital gain tax in 3 ways. One of the way is:
Purchasing Another Property : The Income tax act allows exemption on capital gains to the extent these have been invested in purchasing a new house property.
You have to invest the amount of capital gains and not the entire sale proceeds.
The sale proceeds should be invested only in a residential property, not a commercial property or a vacant plot of land.
You should not own more than one house and in India (from AY 2015-16)
You can claim tax exemption under Section 54 on the long-term capital gain on the sale of a house by using the entire profit to either buy another house within two years or construct one in three years
For more details please read our article Can Capital Gains on Sale of House be used to pay Home Loan
Sir,
I sold a property and invested the complete amount in another property being built by a property developer within one month of sale.The developer in the agreement plans to complete the project before 42 months. The allotment letter was issued to me within one year. Since the project is to be completed within 42 months and not 36 months. Am I eligible for exemption from capital gains.
Thanks
Rajesh
If the builder of the new residential construction fails to hand over the property to the taxpayer within 3 years of purchase, the exemption is still allowed. You can refer to various cases in the article Cap Gain exemption if construction is not completed before 3 years
Good reading.
For Long Term Capital gain::
Is there any tax saving if property owned by both Husband and Wife
is the calculation flat 20% or on slabs like IT returns?
Thanks for appreciating.
If the property is owned by both husband and wife the capital gains will be divided.
Calculation is 20% on indexation after 3 years irrespective of tax slabs.
I booked and was alloted a residential flat in Oct 2011 for INR 25,14,897. It was registeted in Jan 2012, got possesion (without OC) in Dec 2015 and OC is expected in 9 months. I want to know the type and amount of my tax liability if I sell it in Jan/ Feb 2016 for INR 35,00,000.
i am an NRI i purchased house site in 2013 for Rs.8.0 Lakhs and sold the same in 2015 for Rs.15Lakhs by this transaction i become short term gainer Now i want to invest the gained amount by purchasing other house site. i have to invest the total 15 Lakhs to get the short term gain examtion or the difference of 9 Lakh gained amount is enough.
As i am an NRI is there any other special rebate i can avail. please let me know.
Sir,
I have two questions.
Suppose a flat purchased in 1993-94 (index number 244) for 2 lakhs is sold in 2015-2016 (index number 1081) for 15 lakhs. As per index calculations, the actual cost will be 2 x 1081/244 = 8.86 L. Hence the capital gain would be (15-8.86) = 6.14 Ls. If I have to avail tax exemption, I have to purchase another flat within two years (that is, before 2018). Till that time, I have to put the amount in separate account called capital gain account. If this is right, now, my questions are:
1) What is the amount I have to deposit in this capital gain account? Do I need to deposit entire sale price (15L) OR only the capital gain amount (6.14 L)?
2) If I am unable to buy another flat before 2018, how much capital gain tax to be paid? Is it 20% (of 6.14L) or more?
Kindly clarify
Thanks and best regards
Mahesh
sir / madam,
I have a house at Hyderabad and like to sell now ( July,2016), and borrowed 1st loan from bank.
Also i have a flat at chennai, bought with 2nd loan started in Oct’2010 an construction taken 5 years and physical possession given to us in Oct’2015,after paying last installment of loan.
Now can i show the capital gains as investment to the chennai flat, after selling the Hyd house, as it is prior to one year..
Hi
My father purchased a property in 21/5/2010 worth of 283000 and he registered the property to me through sales deeds not through gift, in sales deeds property value is written as 718000 on 30/4/2013. Income notice has come regarding capital gain tax. Is there any way to prove that there is no money transferred in this case and it’s been registered to son by father and if so will it save the capital gain tax?
I purchased a HUDA plot in resale in May 2010 for Rs. 10 lakhs. Paid another Rs. 10 lakhs dues to HUDA in Aug., 2014I constructed house on the plot during 2015 and spent Rs. 35 lakhs on construction. House has recently been sold for Rs. 1.10 cr.Please advise whether I am to pay long term capital gain, because the plot was purchased in 2010 but constructed in 2015. Also pl. advise amount of tax applicable.
Ashish there would be two different transactions:
1. Selling of Land : Time period May 2010 to selling in 2015
2. Selling of house : Time period from Construction completed to selling
My agreement to sale date is June-2010. However my apartment deal (sale deed) is July-2013. I have received the allotment letter from Builder on June-2012. Now if I want to sell the flat, which date I should take for capital gain tax purpose, Agreement to Sale date or date of allotment or Flat Deed date? If I take agreement to sale date, it would fall under long term capital gain. However, if I use the date of Flat Deed, it would fall under short term capital gain. Please advise which date I should take?
Hi,
I have purchased a flat in 31.08.2015 for RS 26,00,000/- ( total value RS 31,00,000/- inclusive stamp duty and improvement charge ) which i have sold on 08.09.2015 for RS 56,00,000.-. Now I have purchased a flat for 63,50,000/- ( total condensation inclusive improvement and registration charge is Rs 75,00,000) by availing a new home loan of Rs 60,00,000/-
can you advice me how much will be my long term capital gain tax.
Regards
Ashish
I am an NRI and had invested in a flat in Mumbai in January 2003 for IRS 21lakhs and intend to sell the same in January 2016 @ IRS 1crore.
I also own a second flat in Kochi bought in 2009.
My queries are as follows :-
1. What would be by LTCG tax liability if I take the entire Sale sum abroad ?
2. Can I get a LTCG tax exemption, if I take the Indexed Sale value abroad and invest the portion attracting LTCG into another Residential project in Mumbai ?
Best Regards,
Junas
Could you please advice how the treatment of LTCG in the following scenarios.
I am an NRI and had invested in a flat in Mumbai in January 2013 for IRS 21lakhs and intend to sell the same in January 2016 @ IRS 1crore.
I also own a second flat in Kochi bought in 2009.
My queries are as follows :-
1. What would be by LTCG tax liability if I take the entire Sale sum abroad ?
2. Can I get a LTCG tax exemption, if I take the Indexed Sale value abroad and invest the portion attracting LTCG into another Residential project in Mumbai ?
Best Regards,
Junas
I have bought a Residential flat in 2001 around 5,75,000 and Sold the house in Apr 2015@ 34,00,000.in which. 80% of the amount was through loan which was closed in feb 2014 after paying remaing loan amount from 34,00,000/-.I have purchased resale flat in Apr 2014 @ 30,00,000/- in which I have taken 12,00,000/- Housing loan from bank. so how much tax I have to pay, Please tell me if there is any tax applicable.
Hi,
I sold one flat yesterday i. ein Dec 15 which I baught in Nov 12, so it will attract long term tax. I recently baught residential plot for construction of a house in Sept 15( 2 months back). Can I show capital gain arising out of flat sell towards plot I purchased and I will build house on the same. Only tricky part is plot is baught before sell of a flat. I know this would have worked if I would have baught flat, but is it OK for plot for construction of a house as well?
Thanks,
Satish
I have purchased my house for 4 lacks in 2003 and now I am selling it for 1.25 crore in 2015 and want to buy another house for 80 lacks so how much tax I have to pay
Using the Capital Gain Calculator and assuming you bought house after 1 Apr 2003. If its between Jan to 31 Mar 2003 CII of 2002 will be used. Your capital gain is around 23 lakhs (23,13,218.14/2306532.44).
You can save the tax,long term capital gain by investing in a new house. So if you are planning to buy house worth 80 lakh you would not have to pay any tax.
Difference between sale and purchase price: 12100000
CII of the Purchase Year: 2003 month: Apr : 463
CII of the Sale Year: 2015 month: Jul : 1081
Purchase Indexed Cost:933909.29
Difference betweem sale and indexed purchase price: 11566090.71
Long Term Capital Gain with indexation (at 20%):2313218.14
If house is bought in Jan-Mar 2003
nvestment Type:Real Estate
Time between :12 years 153 days
Gain Type: Long Term Capital Gain
Difference betweem sale and purchase price: 12100000
CII of the Purchase Year: 2003 month: Feb : 447
CII of the Sale Year: 2015 month: Jul : 1081
Purchase Indexed Cost:967337.81
Difference betweem sale and indexed purchase price: 11532662.19
Long Term Capital Gain with indexation (at 20%):2306532.44
Thanks for the advice
Hi
I have sold my apartment purchased at 18.75 lakhs in 2005 which I have sold in 2015 for 32 Lakhs. 80% of the amount was through loan which was closed after 7 years.
I am planning to invest the entire amount to buy one more apartment in a better location.
Can you please let me how tax will I have to pay.
You don’t have to pay any capital gain. Infact you have Long term capital loss.
Assuming you bought between Apr 2005 to Mar 2006 and sold between Apr 20015 to Mar 2016
Difference between sale and purchase price: 1325000
CII of the Purchase Year: 2005 month: Apr : 497
CII of the Sale Year: 2015 month: Apr : 1081
Purchase Indexed Cost:4078219.32
Difference between sale and indexed purchase price: -878219.32
Long Term Capital Gain with indexation (at 20%):-175643.86
Sir,
I purchased a site through a Registered Society during the year 2000, (in Bangalore) at a nominal cost of Rs. 200/- per sqft. The site is transferred in my name by paying a nominal stamp duty at registrar’s office. It is not through sale deed. It is transfer from Society. Now, I wish to sell the site. I need to get the site registered in my name before selling, as the current prospective buyers need Sale Deed to obtain Loan. While registering the site the guidance value applied could be Rs.5000/- per sqft. and suitable stamp duty and other charges have to be paid by me. Immediately I will sell the site for the same guidance value of Rs. 5000/- and get the site registered in the buyers name. In this case do I need to pay capital gains tax? As I registered and sold the site at the same rate, can I consider it as no capital gains?
I appreciate your response.
Thanks
Satya
Hello,
After my father’s death,my mother sold a part of our family land and transferred the proceeds to me to help in closing my home loan.
The land was purchased in the year 1967 and sold this year – 2015.
My home loan was taken in the year 2008.
Question : Do I need to pay any Capital Gain tax if I intend to use the entire sale proceeds towards closing the home loan?
Thanks for your valuable response.
Questions that we have are:
1. Was land in your mother’s name or you also had a share in the land as Whoever owns the land has to pay capital gain profit/loss.
2. Was the money you got was a gift from your mother?
3. Did you have any long term capital gain from sale of land? LTCG is exempted from tax if a new house is purchased before one year or after two years from the date of sale of a house property.
Exemption is available for reinvestment or purchase of a property. In your case, you have already purchased a property on loan and so repayment of home loan does not mean purchase of a new property.
Land is a short term capital asset when held for 36 months or less. If held for more than 36 months it is considered a long term capital asset.
In case of Long Term Capital Assets, the only difference is, one is allowed to deduct Indexed Cost of Acquisition/Indexed Cost of Improvements from the sale price. Indexation is done by applying CII (cost inflation index). This increases your cost base (and lowers your gains) since the purchase price is adjusted for the impact of inflation.
LTCG are taxed at 20%
So calculate the owner’s long term capital gain/loss.
Thanks for your reply…
Response to your queries are given below :
1. As per my father’s will, my mother would own the property after my father’s death and after my mother, to me and my sister. Hence my mother sold the part of land that would have eventually come to me.
2. After the sale, the proceeds were transferred to me, so it could be termed as Gift. Is that right?
3. After the repayment of loan if I reinvest in a new property within 2 years, will there be exemption from LTCG?
Dear sir,
Plz help me.My income mainly from bank and post office fixed deposit.I have also some share and ncd(non convertable debenture).I earned a little amount through private tution.Combine all I earned less than 2 lac. So I never submit a tax return. But after my fathers death last year ,I sold recently a family land for 8 lac.I want to invest full 8 lac in Capital gain bond.
Now what to do?
1.I have to submit income tax return? or not..
2. if yes. then,,,what form? I am not a salaried person and..can I file through internet?
Sad to hear about your father. Our condolences are with you and your family.
First you need to calculate the capital gain. Capital gain on land depends on how long you had the land?
If you had it for 3 years or more than you have to pay 20% of capital gain or profit.
If you had it for less than 3 years than you have to
You need to find price and year of purchase.
Mr Arora purchased a property on 1st August 2004 for Rs 75lakhs. Neha inherited this property from her father in 2012, however she decides to sell this house. In May 2014, Neha sold this house for Rs 1.8 crores. In this case, cost for calculating Neha’s gain shall be Rs 75 lakhs and the cost shall be indexed since it’s a long term capital gain.
For the purpose of indexation, the CII for 2004-05 shall be considered. Therefore cost for calculating capital gains for Neha shall be Rs 75lakhs x CII of 2014-15/CII of 2004-05 = 75lakhs x 1024/480 = Rs 1.6Crores.
Therefore net gain for Neha is Rs 20lakhs. Do note that the date or year of inheritance are of no importance in this calculation.
So you find your capital gain first. The capital gains, if any, on sale of inherited property shall be taxable in your hands.
LTCG can be claimed as exempt from tax by reinvesting the gains in one new residential property located in India, as per section 54 of the Income-tax Act, 1961. The investment has to be made within the specified time frames, i.e., within one year prior to sale date or two years from the sale date or within three years for an underconstruction property.
If you are unable to reinvest the LTCG into new house before filing the tax return for the financial year (FY) of sale of house, then the unutilized balance LTCG should be deposited into the Capital Gains Account Scheme (CGAS) before the due date of filing your personal tax return.
The amount deposited into CGAS should be utilized for purchase of a new house within aforesaid time frames. If you are unable to do so, the unutilized amount shall be taxable as LTCG in the FY in which three years from sale of old property lapse.
You can also invest it in specified bonds issued by, say, the National Highways Authority of India or Rural Electric Corp Ltd, under section 54EC.
Investment should be made within six months from sale date of property subject to threshold of Rs.50 lakh and fulfilment of specified conditions.
many thanksss sir
You are welcome Sir
Hi there,
I have a couple of doubts about capital gains calc.
1. In 2008/09 I purchased a plot. I was naive and allowed the seller to craft the doc. While the actual cost was much higher, the sell deed reflected compensation well below the market value. Going by the rules, I had to pay stamp duty and registration according to ready reckoner rate.
Now I am planning to sell it. How will the capital gains (/losses) be calculated? Will we take into account the compensation value or the then reckoner rate (i.e. market value) on which I paid stamp duty/registration?
2. When do we discount the stamp duty / registration costs we had paid at the time of buying? Before calculating cost of acquisition or from the net capital gain/loss?
3. While the registration happened on 4/4/08 there are two frankings on the doc – one on 29/2/08 and one on 2/4/08. Going by my first franking payment can I take cost of inflation index of 07/08 or do I have to consider 08/09?
4. Can the annual cleaning of plot be considered improvements and discounted for calculation of capital gains?
5. Can the brokerage paid for (by cheque) be discounted from capital gains – how?
Hi Sir ,
I have sold my flat recently and would like to invest my money in my brother’s house by paying the 50% consideration and my brother will issue release deed for the same.
My query is
1. Will release deed consider as investment of profit in new property
2. My brother have to pay any extra amount , I m planing to pay exactly 50 % of index value of the property .
Lets first understand what is gift deed and what is release deed.
A gift deed allows one to gift her assets or transfer ownership without any exchange of money. The gift of immovable property must be in accordance with section 122 of the Transfer of Property Act, 1882 (TOPA).
Release Deed is executed to Release rights whereby a person renounces a claim upon other person or property. A release deed is quite different from a gift deed, though the legal implications are the same. You can use this instrument if you want to transfer your rights in a particular property to another joint owner(s)/co-owner(s). Such a transfer is irrevocable even if it is without any exchange of money or for monetary consideration.
As with all documents related to the transfer of immovable property, a release deed needs to be signed by both parties, stamped and registered. You should note that stamp duty will be applicable only on the portion of the said property that is relinquished and not on its total value.
Note the advantages and limitations of release deed:
Advantages: It allows seamless transfer of your share in a jointly-held property. This document is most commonly used when a person dies without leaving behind a will and all siblings end up inheriting the property. Unlike a gift deed, you can draw the relinquishment deed for monetary consideration.
Limitations: There are no tax benefits, for as per the tax laws, the term ‘transfer’ includes relinquishment, not gift. Hence, when you are relinquishing property for monetary consideration, it will result in capital gains for the transferor. If the consideration is less than the stamp duty value of the property, the difference between the stamp duty and the consideration will be taxed in the hands of the buyer. If you relinquish it without any consideration, the stamp duty value of the property will be its sales price.
Whenever the house is sold, the co-owners will have to pay tax on the capital gains earned by them. In the case of the second owner, the capital gains will be computed on the basis of the market value of the house as on the date that it was released to him.
So coming to your questions:
1. It is considered as transfer, if registered, so yes it is considered as investment in new property. But please do verify with your bank/CA
2. What extra amount are you referring to?
sir
One of my friend who is now pensioner had sold his house property for consideration of Rs. 50 lacs recently the house is constructed in April 2000. The total cost of the construction is Rs.13 lacs along with all costs. In-fact he had availed housing loan and availed tax exemption too . Please let me know what is the capital gains he has to pay if he do not want to reinvest in housing or else to avoid Capital gain tax what is the provisions applied for.
Nandagopal
If a property is sold after three years from the date of purchase, the profit is treated as a long-term capital gain and is taxed at 20% after indexation .
For real estate, Long term capital gain would be 307733.99. Details calculation are shown below.
But what if you don’t want to buy a property at all with the capital gain (LTCG) amount? You can still get tax exemption. The long-term capital gain tax can also be saved under Section 54EC if the capital gain is invested for three years in bonds of the National Highways Authority of India and Rural Electrification Corporation Limited within six months of selling the house. However, you can invest only up to 50 lakh.
Investment Type:Real Estate
Time between :15 years 94 days
Gain Type: Long Term Capital Gain
Difference between sale and purchase price: 3700000
CII of the Purchase Year: 2000 month: Apr : 406
CII of the Sale Year: 2015 month: Jul : 1081
Purchase Indexed Cost:3461330.05
Difference between sale and indexed purchase price: 1538669.95
Long Term Capital Gain with indexation (at 20%):307733.99
Hi there,
I have a couple of doubts about capital gains calc.
1. In 2008/09 I purchased a plot. I was naive and allowed the seller to craft the doc. While the actual cost was much higher, the sell deed reflected compensation well below the market value. Going by the rules, I had to pay stamp duty and registration according to ready reckoner rate.
Now I am planning to sell it. How will the capital gains (/losses) be calculated? Will we take into account the compensation value or the then reckoner rate (i.e. market value) on which I paid stamp duty/registration?
2. When do we discount the stamp duty / registration costs we had paid at the time of buying? Before calculating cost of acquisition or from the net capital gain/loss?
3. While the registration happened on 4/4/08 there are two frankings on the doc – one on 29/2/08 and one on 2/4/08. Going by my first franking payment can I take cost of inflation index of 07/08 or do I have to consider 08/09?
4. Can the annual cleaning of plot be considered improvements and discounted for calculation of capital gains?
5. Can the brokerage paid for (by cheque) be discounted from capital gains – how?
Thank you for bearing with the queries.
sir,
i acquired property (a house) by a family partition deed, which was sold the detailes
are
,property acquired in 2011-20129( which was in 4 sister in law’s name)
..sold in 2014-15 for rs 53 laks.
..which was constucted in 1992.for rs 15 laks
..what is capital gain tax laiability
..i am 65 years old
My father has bought a property (Land with building) in the year 1978 for 70 thousand Rupees in my mothers name.
My mother passed away in the year 2009 leaving 7 legal hires (My father, one sister and 5 brothers including me)
Later in the year 2010 we demolished the property and got a approval for constructing the apartments for all 5 brothers in the month October 2012.
However we stopped the construction in the year 2014 due to financial constraints and sold the property in 15th of July 2015 for 2.07 Crores.
All 7 of us have equal shares for this sale, however I got the sale amount in my name.
In the sale deed they have mentioned the cost 50 Lacks for land while 1.57 crores for Land and also they have mentioned the property type as new which means the age of building is less than 3 years.
Now the clarifications what I have here is
1) Will the tax be calculated as long term for land and short term for building (as the age of building is less than three years) ? or both land and building will be calculated as Long term capital gains ?
2) The buyer has paid the TDS in my name (Saiprasad) alone wrongly as 2015-2016 while it should be 2016-2017, what will be the implications for the same
3) What can I do to avoid taxes
My husband bought a sh in 2008. With another co-owner with 50:50 ratio. He passed away & I inherited his 50% share in the property.there is a bank loan on it.ibwant to sell the property in 2015 .what will be the tax implications?
—a) do we need to go in for registration & pay the stamp duty by the buyer because he is also my husband’s brotner.
—b) how should we calculate the cost of acquisition?
—d) can I gift away a part of it & sell away the rest?what will be the implications? Then how do we calculate the cost of acquisition & capital gain?
—C)
Your brother in law’s share of 50% in the property, needs to be transferred in your name.
Get the circle rate from the advocate (private who have their chambers in sub registrars office) or property dealers in your area and calculate the value of the property. Buy non judicial stamp papers based on the stamp duty to be paid for the 50% share, get the papers prepared and both of you go to the sub registrar office with your ids and PAN cards a must .
You can also get a release deed prepared by a deed-writer and pay stamp duty as per the circle rate .The gift deed is also liable for payment of equivalent stamp duty . The alternative is to get a will registered in respect of 50% share provided you are not selling the house in the foreseeable future.
Do remember to carry Aadhar card to Sub-reg. office
Do consult a Lawyer who deals in Property matters .
I have one residential house and my society flat registered in my name.
If I sell the society flat, which I have held for more than 3 years and invest the indexed proceeds for purchase of another one residential society flat, will I be eligible to avail benefit of long term capital gains?
Arun
Yes Sir capital gains from sale of flat can be invested in buying 1 residential house or flat after 3 years.
My father along with his 2 brothers purchased a plot in noida in the name of my uncle in 1999. Now we are selling the property. Please let me the procedure for tax calculation levied on this.
The money received from the transaction would have to be divided among the three brothers . Can you let me know what are the complexity and challenges involved i this from an income tax perspective.
akash
Sir you need to calculate the capital gains
As it held for more than 36 months it is considered a long term capital asset.
In case of Long Term Capital Assets, in calculation of capital gain,which is sale price – indexed purchase price. one is allowed to deduct Indexed Cost of Acquisition/Indexed Cost of Improvements from the sale price. Indexation is done by applying CII (cost inflation index). This increases your cost base (and lowers your gains) since the purchase price is adjusted for the impact of inflation.
LTCG are taxed at 20%
Section 54F (applicable in case its a long term capital asset) – If you are using your entire sale proceeds to buy a house property you may end up paying no tax on your gains when – You satisfy all these conditions
(a) You purchase ONE house within 1 yr before date of transfer or 2 yrs after, or construct ONE house within 3 yrs after date the transfer.
(b) You do not sell this house withing 3 yrs of purchase or construction
(c) This new house purchased or constructed must be situated in India
(d) You should not own more than 1 residential house (other than the new one) on the date of transfer
(e) You do not purchase within a period of 2 yrs after such date or construct within a period of 3 years after such date any residential house (other than the new one).
When you satisfy these conditions, and invest entire sale proceeds towards the new house – you won’t pay any tax on your gains. However, if you invest a portion of the sale proceeds, the exemption will be the proportion of the invested amount to the sale price or exemption = cost of new house x capital gains/net consideration.
if you do not intend to purchase another property, there is no use of investing the amount in a Capital Gains Account Scheme. In such a case, you can still save the tax on your capital gains, buy investing them in certain bonds. Bonds issued by the National Highway Authority of India (NHAI) or Rural Electrification Corporation (REC) have been specified for this purpose. These are redeemable after
3 years and must not be sold before the lapse of 3 years from the date of sale of the house property.
For more than 1 person involved the capital gain should be divided equally. Challenge can be the paperwork to show that land was bought by all three brothers and no fight among the brothers.
Sir, We are two brothers booked a flat at pune, elder brother has flat in kolkata which was purchased in 2003. The query (a) on selling of the kolkata flat, can the proceeds be invested in new flat at pune ( in joint names) within the same year or more. (b) Who will be the first applicant for registering the new flat i.e. elder or younger brother as younger brother will be taking loan from bank… will this qualify LTCG for elder brother.
KIRTI PL.REPLY AT THE EARLIESTas the old man is ailing due to the complexicity of the rules &also advise what he has to do now. My friend has sold his house on 09/03/15.He purchased a house within six months in
the name of his wife.His wife is 59yrs old & is a housewife with no income source.NOR she is a taxpayer.Property sold amt.2olakhs.purchased amt.®.charges
etc.20lakhs.My friend is a pensioner earning 2.5 lacs PA.pension.Is he liable for CAPITAL GAIN TAX.Pl reply at the earliest.Subodh Shrivastava
Sir
What was the purchase price of the property sold in 09/03/15 and when was it purchased. Capital gain is on the property sold and that needs to be invested
I have purchased a house for 8.3 lacs on the loan in 2005 with loan of 7.1 lac.Pre closed the loan in 2014. (pre closure amount 4 lacs)
I am selling in 2015 for 50 lacs.
How much will be considered for the cost index, how much I should pay as capital gain tax for long term capital. I have claimed the tax bebefit for the house loan (both principle and interest).
Dear Sir,
I am planning to sell one residential plot in Lucknow which was purchased in Year 1997. I am also planning to purchase a resale property from a seller ‘X’. This is a society flat in under-construction position in Noida for which seller ‘X’ yet did not receive the possession letter. Seller purchased that property on year 2012. So he will just transfer his ownership to me on Sep’15. Possession will be in around next 2.0 Yrs from builder.
My queries are –
1) Is Resale property considered to get the exemption on the long term capital gain?
2) Residential plot (to sell) is in mother’s name and so I will be purchasing resale flat on mother’s name only. But if I become co-applicant with mother in new buying property (to avail the home loan and to pay home loan myself), will it affect anyhow in property gain tax exemption?
3) Residential plot to sell is actually 2 plots but in single registry. Can i sell one plot and invest in one property and another sell to another property and exempted by property gain tax?
Thanks
Sir it is best if you consult a tax lawyer or CA
Mr X sold a House – a long term asset. The sale proceeds were used for buying a new house. Exemption under LTCG u/s 54F by buying a new House was claimed. In Buying a House Rs A [out of the sale proceeds] was also used for Stamp duty and registration for the NEW House for which 54F exxemption was already taken.
Can 54F and 80C [used for stamp duty & regd] used simultaneously.
Can exemption under 54F and deduction under 80C – both claimed simultaneously.
Long term asset other than house is sold say Land.
I have sold my agri.land which was purchased 14 months back. But I have not earned any amount out of this transaction. While purchasing I had purchased for 15 lakh and while selling I got 15 lakhs only. Let me know whether I have to pay any tax?
sir, my son has given me a gift of gold and i want to purchase of a second house in my name against sale of gold which recd me as a gift from my son.i am liable to pay capital gain?
i have book flat may 11 and possession taken dec 13. i have purchased flat 17 lacs ( inclusive st & VAt, stamp duty) and i have sold flat on rs. 26 lacs. it is short term capital gain or long term capital gain
Tricky question
On school of thought is:
Tax authorities in India are taking a position on the basis of various judgements, that the facts of the case are given a priority to consider the availment. For instance, to qualify the investment in case of builder flats, the crucial date is the date of allotment of the residential flat and the payment of instalment is a follow up action.
Allotment is a sufficient compliance for getting the benefits, even if the taxpayer has not paid all installments due under the said scheme. The provisions of the section are a beneficial provision for promoting the construction of residential house. Thus, the date of issue of an allotment letter gives a right to the taxpayer (Intended buyer) to obtain conveyance on the said flat so that it becomes an asset within the purview of the Income-tax Act. The date of acquisition of the said flat shall be the date on which the allotment letter is issued to the intended buyer.
Another school of thought says
In the case of Capital gain arising due to transfer of the capital assets , the period of the holding of the property is important . In this case you got possession letter in Dec 2013 so the period of holding will start from there . So the provision allotment and registration of the house property is not important . From above it seems that it is short term capital gain .
Ref:Nature of capital gain short term or long term
Thank you for such useful information.
Please clear my one doubt.
I booked flat on 1 Dec 2013.
I as a buyer and builder as a seller signed agreement on 5 Dec 2013.
I got possession in Jan 2015.
I just want to hold this property min 3 yrs so that I will get long term capital gain benefits while purchasing new home.
So please tell me from which date 3 yrs time period will start?
Thank you in advance.
Tricky question
Some say Date of allotment is key in under-construction flat
Some say
One who has right to sell the property without receiving possession from the builder can carry out the sale when the property is in under construction stage as it significantly reduces the tax liability in respect of capital gains. If the individual sells the property after acquiring ownership the three year period comes into existence from the date of taking possession. Tax Benefits on under construction property
So don’t take possession of the property then date of allotment will be considered.
Thanks for your reply…
When we signed agreement on 5 Dec 2013 in that agreement flat number as well as parking no was mentioned and I was keeping original agreement from that time. As usual only 5 % payment was due which I supposed to pay at the time of possession. In Feb 2014 we received OC from issuing authority. But I was out of India so that I took from builder in 2015.
Yesterday I read one case if I am not mistaken in that court gave decision that time should be considered from as you said from the date of allotment payment as well as possession merely stands for formality.
Here is the link http://m.moneycontrol.com/news/tax/durationcap-gains-must-be-basedateallotment_981630.html
Thanks once again for your information.
Thanks for updating us.
There are always two ways of interpreting the Income tax law it seems, confusing the people.
Thank you for such useful information.
I have one doubt please clarify it.
I booked flat on 1 Dec 2013.
I as buyer and builder as a seller we signed agreement on 2 Dec 2013
I got possession in Jan 2015.
I want to hold this property as much as short period so that I can get befit of long term capital gain to purchase new home.
Please tell me from which date my Long term capital gain will start.
HELLO,
Thank you for a well articulated points.
I have few questions to clarify and request to enlighten me.
I had sold a property which inherited before 1980 and wasl sold for Rs. 95 lakh.
I had purchased an apartment in 2007 on loan and part of the amount (rs. 35.0 la)was used to close the home loan. The remaining amount is still in my savings account would like to invest in real estate to avoid capital gain tax. now i am in cross road what to do as i am not clear with few points stated below and request to clarify them.
1- will the amount invested in current apartment to close the home loan subject to tax? if yes yes how much and is there any method to avoid tax?
2- The remaining amount in saving account, if deposited in CGAS,in fixed depost, can I withdraw the interst month on month basis?
3- can I invest part of amount(rs. 53.0 la) invested with CGAS in an upcomming apartment?
4- what are the implications if I sell the new apartment with in three years and reinvest the entire amount plus the remaining amount from CGAS (with in three years)?
5-can the amount in CGAS be invested in two separate apartment, or one apartment and part in land?
5- If I sell the new apartment after three years, what could be the tax?
(say- purchased cost- 53.00 lakhs, if sold for Rs. 90.00 lakhs)
Thank you,
Sureshkumar
Hello, we have agriculture properly under MC limit. The property is very old and more than 50 year old. My grandfather mortgage this property to a farmer. The above said property transferred to the name of my father in 2007 after couple of court cases. So we want to sale this property for my sisters marriages. So I want to knw few things :- 1 which date we consider for computing capital gain 2 is there any relief for small farmer 3 can we transferred this amount to sisters account
I have a quarry about taxed in which year.
I received full consideration in march 2015 but the purchaser registry for the property in may 2015 then i claim the capital gain in which Assessmemt Year 2015-16 or 2016-17. Please help me for the case.
Dear Mr. Kirti,
My daughter is NRI/Canadian. She has sold her property in India and money deposited in their Indian Bank A/c. She wants to give Rs. 30 lakhs to me as Gift to enable me to complete/purchase my Bungalow.
-Can she give money to father and required to prepare Gift Deed, duly notarized in Canada and register same in India?
-I have to pay any tax for this money/gift.
-Whether I have to show this gift in my IT Return without paying any tax?
-My daughter has to show profit amount i.e. (Capital Gain = Sale Price MINUS Indexed Cost of Acquisition, Say Rs. 10 Lakhs). In IT Return under Income from other source 10 L minus 2.5 L (nil tax) and pay 20% on 7.5L i.e. Rs. 1.50L.
Thanks.
The date of completion of A house is 25.05.2011
the date of registery is 31.06.2012
And the house property was sold on 28.05.2015
whether the house property be considered as short term or long term.?
I am selling a property for 4 crore and executing the sale deed by accepting 2crores. Only after 30 months I will get the balance which is clearly mentioned in sale deed. My question is on which date I have to calculate LTCG and payment to be made?
Great article. Specially for newbies like me.
I purchased a flat in 2009 for me and then another in 2010 for my brother. Both with loan. As my brother was not earning much I registered the second one in my name and I was paying the loan installments. My father is co-owner in second flat. Now my brother settled in different city so the second flat is under process for selling and planning new one in other city in my brothers name (now he can manage his loan papers and EMI). I do not want any money from the flat neither I want my name in new property that we are planning in new city. Still we can have my father as co-owner in new purchase.
Can I after getting the payment gift the money to my brother for buying property and escape long term capital gain? Or I need to have my name in new property also? Or can we take full payment while selling in my father’s name?
Kindly guide.
Hello sir,
I booked a residential apartment in jan 2010 Which I have registered in sept 2014, Now I have sold this residential apartment in june 2015. Am I eligible for long term capital gain tax.
As per my CA date of registration would be accounted which means it will attract short term capital gain tax, but after reading lot of article over internet I am confused as some says from the date of allotment and others from date of registration.
Kindly help here
Vipin
My relative is senior citizen, she wants to sale his house which was made from his own retired money, now she is sailling her property to another person,she will distribute her money among her children, pl let me know is she is applicable for any tax? her property value 32 lakhs, buyer is taking home loan from bank. her children will take new home from thismoney. Pl let me know whether any rebate from tax or not?
House is constructed on a plot and loan is taken for both. Pl clarify the following:
A) The date of purchase will be considered from which of the following:
1. Date of first payment for plot.
2. Date of allotment or possession or completion of house or registration.
B) Also pl inform how to calculate the cost of construction of house.
C) Will cost of the overall property be based on the total no of EMIs paid to bank plus other expenses from own money.
D) From where can I get the CII figures.
Thanking you in anticipation.
7.7.15
I want to sell a property.I’ve never claimed exemption from interest.Can I add the interest component,property tax paid on the property in the purchase price and index accordingly?
I have sold a property on agreement in 2007 of Rs 13.00 Lac payment made through cheque Rs 12.Lac and Cash Rs 1.00 Lac .in 2007 i registered in 2011 The Stam Value was RS 21.0 LAc on this date
Pls Explain about capital gain status on following point
1. In which year capital gain arise in 2007 or 2010
2. What will be sales consideration
3. and amt of capital gain
4. TAx Planing
have earned a long term capital gain from selling my property. please let me know how i can save incme tax on the sale of this property.
Thanks for this article. I’m not going to sell my house for now, but surely when i’ll do i’ll read article your article. Thanks
Dear Sir,
I have sold my house in July-2014 for an amount of Rs.13,00,000/- which was purchased in April-2010 for an amount of Rs.6,00,000/- + Registration Charges Rs.75,000/-. According to me, my capital gain amount is 3,35,000/- and my net taxable income from salary and capital gain is 691000 after deducting deductions available under Section 80-C.
Now, i have paid an amount of Rs. 12000/- in the form of TDS upto March-2015. I have paid Rs.55,000/- through self assessment tax starting from April-2015 to June-2015. What would be my tax liability after deducting the TDS amount and if interest is to be paid on delayed payment of remaining tax and at what rate?
I would be grateful if you could guide my in this regard.
Sir, I am in process to sell my share of inherited property which is a small plot.I wish to know how long can I keep the money received in a bank safely before this amount becomes liable to be taxed. will take about 3-4 months to buy a house for myself from this money.I will be utilising 90 percent of the amount say 1.8 crores ane keep some money for my daughter’s scholling.Kindly advice.
Paresh Merchant
Dear Sir, Thank you for the nice article.
I would like to know more about selling inherited property. We my mother, my sisters and me together sold a property without any partition and all the amount has be dived and given directly to the sisters with account transfer mentioned in the sale deed itself in feb 2015. One of the sister has reinvested and others are still not and kept in the account itself. The property Katha was in my mother’s name and my name. There is no will or any gift, so we all sold it together. Now, will there be any capital gain tax with this, can you please explain.
Dear SIr I have purchased one property with house for Rs.7.5 lakhs and sold the same in 2015 for Rs.12.5 lakhs, and again purchased one land for 9 lakhs. please inform me whether I have to pay any tax for this.
My wife had purchased a house in Feburary 2010 by paying 20%.The LETTER OF ALLOTMENT DATE IS 11-APR-2011 and the Agreement & Registration was done in MAY’2011 . The Total costing was 17.25 .
The Posession of the flat was received in march’2014 . On May 2015 i had sold this flat for 30.5 .
Will it be a Long term capital gain or Short term capital gain ?
If it Long term what will be my capital gain that i need to reinvest in a property. ?
If a reinvest the full amount of capital gain in a under construction property immediately is there any restrictions that the posession of the property has to received in 3 years from the date of agreement or Sale date of my earlier flat. ?
I had purchased a house in Feburary 2010 by paying 20%.The LETTER OF ALLOTMENT DATE IS 11-APR-2011 and the Agreement & Registration was done in MAY’2011 . The Total costing was 17.25 .
The Posession of the flat was received in march’2014 . On March 2015 i had sold this flat for 39.5 .
Will it be a Long term capital gain or Short term capital gain ?
If it Long term what will be my capital gain that i need to reinvest in a property. ?
If a reinvest the full amount of capital gain in a under construction property immediately is there any restrictions that the posession of the property has to received in 3 years from the date of agreement or Sale date of my earlier flat. ?
i sold my row house costing rupees 23 lac but the agreement between buyer and me is made of 24 lac for loan purpose and bank giving 17 lac’s cheque and rest amount buyer paid me in cheque ,now at what amount should i have to pay capital gain
my father bought a land in his sister’s name in way 70’s, in 2005 i have made duplexes in that my father’s sister kids gave me irrevocable power of attorney for construction of house, in 2014 i have sold that house just after taking the registered gift.
Now my question is since i have sold the property just after getting the Gift, will the entire amount will be considered as Capital gain, or the amount i have invested in construction will be deductible.
Dear Sir,
Thanks a lot for your valuable advice. I want to know whether stamp duty on registering a property is included in purchased amount or not. e.g. I bought a property house with Rs. 600000/- and registered with stamp duty 36000. Now what will be the purchase cost for calculating capital gain?
Sir,If you have purchased a house property or if you have constructed a house property – Stamp Duty & Registration Charges and other expenses which are directly related to the transfer are allowed as a deduction under section 80C.
Hi,
I have a query on Long Term Capital Gains Calculation.
I booked a flat in Nov 2004 and it was registered in March 2007 and the value was 10,00,000/- inclusive of all costs.The registered value was around 7,75,000/-.
I spent 3,00,000/- towards renovation and wood work in Nov 2009, for which I do not have bills.
I sold the flat in March 2015 for 25,00,000/-.I have also claimed tax deductions from March 2005 including pre emi period and from June 2006 have claimed EMI deductions.
Please help me understand how would I be able to calculate indexation and the capital gains tax component.
Thanks,
Nagendra S
Hi,
We purchased a portion of the property in 1987, paid full an final consideration of Rs.85000, got an agreement to sell in our name, got the agreement to sell registered, got the possession of the house and started living in the house.
The property was however not freehold and we could not get the portion of the property bought registered in our name.
We now plan to register the property in our name and would now need to pay the stamp duty as per the prevailing Circle rate specified by the Govt.
Would this registration in our name have any Capital Gains Tax implications for the seller now when no exchange of money has happened now but happened only in 1987.
Please share your expert opinion and advise.
Thanks.
Hi,
We purchased a portion of the property in 1987, paid full an final consideration of Rs.85000, got an agreement to sell in our name, got the agreement to sell registered, got the possession of the house and started living in the house.
The property was however not freehold and we could not get the portion of the property bought registered in our name.
We now plan to register the property in our name and would now need to pay the stamp duty as per the prevailing Circle rate specified by the Govt.
Would this registration in our name have any Capital Gains Tax implications for the seller now when no exchange of money has happened now but happened only in 1987.
Please share your expert opinion and advise.
Thanks.
Registering your property should be the top priority when you buy a house as it proves your legitimacy to carry out any transaction. A person is considered the lawful owner of a property only after he gets it registered in his name. The Supreme Court had ruled last year that all property sales would be considered invalid unless the sale deed was duly stamped and registered.
As you said Registration charge and stamp duty will be levied on the current value of the houses. But Adding to this burden will be a hefty fine that you will have to pay for the delay.
Expenses on Transfer include any expenditure incurred, whether directly or indirectly, for the purpose of transfer like However, any expense which has been claimed as a deduction under any other provision of the Income Tax Act cannot be claimed as a deduction under this Clause.
It’s better to take advise of lawyer or CA
I have sold my ready possession flat on 22.01.2015 (Rs.1700000 Agreement Value)
Purchase date is 27.07.2012 (Rs. 1100000 Agreement Value)
I think it will be short term capital gain (2 year & 6 Month gap)
How much tax liability & % will be on stcg Rs.600000
My Salary Income is 400000 PA
Pl suggest me Mo. 9822886835/ 9765869931
I have sold my ready possession flat on 22.01.2015 (Rs.1700000 Agreement Value)
Purchase date is 27.07.2012 (Rs. 1100000 Agreement Value)
I think it will be short term capital gain (2 year & 6 Month gap)
How much tax liability & % will be on stcg Rs.600000
My Salary Income is 400000 PA
Pl suggest me Mo. 9822886835/ 9765869931
Apologies for delay in reply.
You are right Sir, Its a short term capital gain and tax liability will be as per your income slab
Short Term Tax is as per income slabs:60000(at 10%)/120000(at 20%)/180000(at 30%).
As your income is between 2.5 to 5 lakh you fall in 10% slab. so tax would be 10% of 6,00,000 ie 60000
Purchased house in 2005 and sold in 2015. I have invested in another flat in 2011 on loan but got possession in 2015 Can I use LTCG from first house to pay outstanding lian amount or do I have to purchase another house to save LTCG. Ig I have to invest on bonds will I get tax free interest
Purchased house in 2005 and sold in 2015. I have invested in another flat in 2011 on loan but got possession in 2015 Can I use LTCG from first house to pay outstanding lian amount or do I have to purchase another house to save LTCG. Ig I have to invest on bonds will I get tax free interest
Sale proceeds from sale of property used for repayment to bank will not avail exemption u/s 54. The condition is to purchase another property, either completed flat or underconstruction flat, within a period of 2 years after sale of property.
For a flat that is under construction Date of agreement/Date of allotment letter would be the purchase date.
So your LTCG from sale of 1 property cannot be used to claim purchase of under constructed property.
You will have to buy a new house or bonds to avoid capital gain tax
I have a home bought in my and my wifes name in 2005. Want to sell the same in April 2016.
Want to buy one more home only in my wifes name (Registration: April 2015 and Possession: March 2016).
My questions are:
1. Whether capital gain tax exemption will be applicable if i sell new home in April 2016 and the new home Registration in April 2015 and Possession in March 2016?
2. Will there be any issue in capital gain tax exemption if i use the proceeds of old home in repaying my home loan for new home?
3. Will there be an issue in capital gain tax exemption if the old home is in my and wifes name and the new home is only in my wifes name?
Or do we need to have new home also in my and my wifes name to avail capital gain tax exemption?
Thanks for your suppport.
Thanks and Best Regards
Manish Basnale
I have a home bought in my and my wifes name in 2005. Want to sell the same in April 2016.
Want to buy one more home only in my wifes name (Registration: April 2015 and Possession: March 2016).
My questions are:
1. Whether capital gain tax exemption will be applicable if i sell new home in April 2016 and the new home Registration in April 2015 and Possession in March 2016?
2. Will there be any issue in capital gain tax exemption if i use the proceeds of old home in repaying my home loan for new home?
3. Will there be an issue in capital gain tax exemption if the old home is in my and wifes name and the new home is only in my wifes name?
Or do we need to have new home also in my and my wifes name to avail capital gain tax exemption?
Thanks for your suppport.
Thanks and Best Regards
Manish Basnale
hi, I have put Rs. 5.6 lacs in the CGAS – type B ( fixed deposit with SBI) from a sale of house in Dec, 2014. I don’t want to buy a property in the next 3 yrs due to various reasons. How can I utilize this money with out paying tax on this after the completion of 36 months.
I had bought a residential plot in Jan, 2013 partly with my savings & by taking a loan from LICHFL. The construction of the same was completed (completion certificate received from HUDA, GGN in Aug, 2014) in Aug, 2014 & is currently occupied by us.
Can I use this FD to partly pre-pay my home loan? Pls advice.
thanks -Pradeep
Hello Pradeep,
Some theory:
You can claim tax exemption under Section 54 on the long-term capital gain on the sale of a house. To avail of this exemption, you must
Purchase of another Residential Property within 1 year before or 2 years after the due date of transfer of the Property sold and/or
Construction of Residential house Property within a period of 3 years from the date of acquisition
As you constructed the house within 3 years of sale of House you can claim capital gain for constructing the house.
hi, I have put Rs. 5.6 lacs in the CGAS – type B ( fixed deposit with SBI) from a sale of house in Dec, 2014. I don’t want to buy a property in the next 3 yrs due to various reasons. How can I utilize this money with out paying tax on this after the completion of 36 months.
I had bought a residential plot in Jan, 2013 partly with my savings & by taking a loan from LICHFL. The construction of the same was completed (completion certificate received from HUDA, GGN in Aug, 2014) in Aug, 2014 & is currently occupied by us.
Can I use this FD to partly pre-pay my home loan? Pls advice.
thanks -Pradeep
Hello Pradeep,
Some theory:
You can claim tax exemption under Section 54 on the long-term capital gain on the sale of a house. To avail of this exemption, you must
Purchase of another Residential Property within 1 year before or 2 years after the due date of transfer of the Property sold and/or
Construction of Residential house Property within a period of 3 years from the date of acquisition
As you constructed the house within 3 years of sale of House you can claim capital gain for constructing the house.
Dear Sir / Madam,
I have a home bought in my and my wifes name in 2005. Want to sell the same in April 2016.
Want to buy one more home only in my wifes name (Registration: April 2015 and Possession: March 2016).
My questions are:
1. Whether capital gain tax exemption will be applicable if i sell new home in April 2016 and the new home Registration in April 2015 and Possession in March 2016?
2. Will there be any issue in capital gain tax exemption if i use the proceeds of old home in repaying my home loan for new home?
3. Will there be an issue in capital gain tax exemption if the old home is in my and wifes name and the new home is only in my wifes name?
Or do we need to have new home also in my and my wifes name to avail capital gain tax exemption?
Thanks for your suppport.
Thanks and Best Regards
Manish Basnale
Dear Sir / Madam,
I have a home bought in my and my wifes name in 2005. Want to sell the same in April 2016.
Want to buy one more home only in my wifes name (Registration: April 2015 and Possession: March 2016).
My questions are:
1. Whether capital gain tax exemption will be applicable if i sell new home in April 2016 and the new home Registration in April 2015 and Possession in March 2016?
2. Will there be any issue in capital gain tax exemption if i use the proceeds of old home in repaying my home loan for new home?
3. Will there be an issue in capital gain tax exemption if the old home is in my and wifes name and the new home is only in my wifes name?
Or do we need to have new home also in my and my wifes name to avail capital gain tax exemption?
Thanks for your suppport.
Thanks and Best Regards
Manish Basnale
Thank you so much for the informative article. One clarification:
For saving tax by buying another property, you said:
1. Use the entire profit to either buy another house within two years or
2. Construct one in three years.
3. If you had already bought a second house within a year before selling the first one, you could still avail of the tax exemption.
Did you mean entire PROFIT or entire SALE PROCEEDS in point 1? And if profit, is it indexed or unindexed?
And now my query:
I have two house properties, both bought on bank loan, one in my home town in 2006 and one at my current work location in 2013. The one in my home town is let out and earning some nominal rent. Ever since I bought the second house here, finances have been very tight. I knew this situation would occur but it was the wise thing to do given that the house rent I was paying kept increasing year on year, as is prevalent across the city.
I would now like to sell the property in my home town. I am aware that sale proceeds of house property attracts LTCG tax but can be exempted if I purchase a new house within 2 years. However I would rather pay off some sundry loans and part of the second home loan. Does this carry any tax incentives?
Quick calculation shows that I stand to gain about 2-3 lakhs after indexation.
Sir,
It’s the indexed profit that you need to invest not the Sale proceeds. Exemption will be limited to the capital gains or the cost of the new house, whichever is lower
it cannot be sale proceeds as then entire indexation concept would be useless.
It has now been clarified that the investment for getting capital gains benefit should be made in one residential house property situated in India, not abroad. This amendment will apply in relation to the assessment year 2015-16 and subsequent years.
To be able to save tax on capital gains, you must invest the entire LTCG from the sale of residential property in another (only one) residential property in India. Such investment can either be within one year before or two years after the date of sale. You could also construct another residential property in India within three years of the date of sale.
Also, you may deposit the amount of capital gains under capital gains account scheme with a bank in case investment in new property is not made before fi ling of I-T return (not later than the due date for fi ling your I-T return). If the entire amount is not reinvested or not deposited in capital gains account scheme, the remaining portion of the gain will be taxable.
Caution point: Exemption from LTCG will not be available in case the reinvestment is made in more than one flat, even if the same are adjoining flats, or in a commercial property. Further, while the RBI permits you to invest in property overseas (a remittance of $250,000 or Rs 1.5 crore approx per year is permitted which can even be used for property acquisition), if LTCGs are reinvested in property overseas you will not get the tax exemption.
Exemption is also available on investments made in certain bonds within six months of sale. They include Rural Electrifi cation Corporation and NHAI. The maximum amount that can be so invested is Rs 50 lakh.
Thank you so much for the informative article. One clarification:
For saving tax by buying another property, you said:
1. Use the entire profit to either buy another house within two years or
2. Construct one in three years.
3. If you had already bought a second house within a year before selling the first one, you could still avail of the tax exemption.
Did you mean entire PROFIT or entire SALE PROCEEDS in point 1? And if profit, is it indexed or unindexed?
And now my query:
I have two house properties, both bought on bank loan, one in my home town in 2006 and one at my current work location in 2013. The one in my home town is let out and earning some nominal rent. Ever since I bought the second house here, finances have been very tight. I knew this situation would occur but it was the wise thing to do given that the house rent I was paying kept increasing year on year, as is prevalent across the city.
I would now like to sell the property in my home town. I am aware that sale proceeds of house property attracts LTCG tax but can be exempted if I purchase a new house within 2 years. However I would rather pay off some sundry loans and part of the second home loan. Does this carry any tax incentives?
Quick calculation shows that I stand to gain about 2-3 lakhs after indexation.
Sir,
It’s the indexed profit that you need to invest not the Sale proceeds. Exemption will be limited to the capital gains or the cost of the new house, whichever is lower
it cannot be sale proceeds as then entire indexation concept would be useless.
It has now been clarified that the investment for getting capital gains benefit should be made in one residential house property situated in India, not abroad. This amendment will apply in relation to the assessment year 2015-16 and subsequent years.
To be able to save tax on capital gains, you must invest the entire LTCG from the sale of residential property in another (only one) residential property in India. Such investment can either be within one year before or two years after the date of sale. You could also construct another residential property in India within three years of the date of sale.
Also, you may deposit the amount of capital gains under capital gains account scheme with a bank in case investment in new property is not made before fi ling of I-T return (not later than the due date for fi ling your I-T return). If the entire amount is not reinvested or not deposited in capital gains account scheme, the remaining portion of the gain will be taxable.
Caution point: Exemption from LTCG will not be available in case the reinvestment is made in more than one flat, even if the same are adjoining flats, or in a commercial property. Further, while the RBI permits you to invest in property overseas (a remittance of $250,000 or Rs 1.5 crore approx per year is permitted which can even be used for property acquisition), if LTCGs are reinvested in property overseas you will not get the tax exemption.
Exemption is also available on investments made in certain bonds within six months of sale. They include Rural Electrifi cation Corporation and NHAI. The maximum amount that can be so invested is Rs 50 lakh.
Hi,
I sold a land plot and bought new apartment using the gains from selling the land plot. I stay in the house which is in my name completely. The newly bought apartment is registered in my name as well as my son’s name, and he stays over there.
Please suggest can this be considered as capital gains and availed tax exemptions?
Suggest how do i file tax for this scenario?
Thanks
Hi,
I sold a land plot and bought new apartment using the gains from selling the land plot. I stay in the house which is in my name completely. The newly bought apartment is registered in my name as well as my son’s name, and he stays over there.
Please suggest can this be considered as capital gains and availed tax exemptions?
Suggest how do i file tax for this scenario?
Thanks
Hi,
Firstly let me compliment you on an excellent write-up. It is extremely useful.
I need some help regarding capital gains computation for a long term residential house property i’m selling in May 2015. Details are mentioned below:
1. Sales Consideration = Rs. 3 Cr.
2. Society Transfer Charges = Rs. 15 lakhs (way over the legally allowed limit of Rs. 25,000 but I cannot avoid this).
Query No. 1: Can I claim this Rs. 15 lakhs as an expense for transfer (like brokerage)?
Further, I plan to invest the proceeds in a new residential house property to avail benefit u/s 54 after 1 year.
Query No.2: However, do I have to pay advance tax on this transaction in the relevant quarter? Do I have to disclose how much I will later invest? It is difficult to zero in on the exact figure as of now as property prices fluctuate.
Query No. 3: I will be purchasing an unfurnished property after 1 year. Is cost of furnishing the property allowed to be added to cost of new property for the purposed of sec. 54? Please point me to the relevant sections or case laws if you feel it will help.
Thanks a ton in advance!
Dear Mr Varun,
The reply to your queries goes as below:
1) Society Transfer charges can be an allowable expenses for computation of capital gains in your hand, ensure that you have a receipt of the same.
2) Once the property is registered in buyer’s name, the incidence of sales will be completed. And then you can calculate Capital gain(hopefully this is Long term). If you are not immediately investing the gain amount in any other property, please deposit the same in a separate bank a/c which is called Capital Gain Account. This you can open in specified nationalized banks. Please inquire in your near by Bank.
If you deposit the whole amount of capital gain in this account and use the same in another property within specified time period there will be no tax. If you are not able to use the same within specified limit, the balance will be treated as income for the year after the expiry of limit.In that financial year only you need to pay advance tax.
3) Yes cost of improvement/furnishing the property also can be added to the cost of property. Please maintain bills for the same.
Regards,
Swagatika
Hi,
Firstly let me compliment you on an excellent write-up. It is extremely useful.
I need some help regarding capital gains computation for a long term residential house property i’m selling in May 2015. Details are mentioned below:
1. Sales Consideration = Rs. 3 Cr.
2. Society Transfer Charges = Rs. 15 lakhs (way over the legally allowed limit of Rs. 25,000 but I cannot avoid this).
Query No. 1: Can I claim this Rs. 15 lakhs as an expense for transfer (like brokerage)?
Further, I plan to invest the proceeds in a new residential house property to avail benefit u/s 54 after 1 year.
Query No.2: However, do I have to pay advance tax on this transaction in the relevant quarter? Do I have to disclose how much I will later invest? It is difficult to zero in on the exact figure as of now as property prices fluctuate.
Query No. 3: I will be purchasing an unfurnished property after 1 year. Is cost of furnishing the property allowed to be added to cost of new property for the purposed of sec. 54? Please point me to the relevant sections or case laws if you feel it will help.
Thanks a ton in advance!
Dear Mr Varun,
The reply to your queries goes as below:
1) Society Transfer charges can be an allowable expenses for computation of capital gains in your hand, ensure that you have a receipt of the same.
2) Once the property is registered in buyer’s name, the incidence of sales will be completed. And then you can calculate Capital gain(hopefully this is Long term). If you are not immediately investing the gain amount in any other property, please deposit the same in a separate bank a/c which is called Capital Gain Account. This you can open in specified nationalized banks. Please inquire in your near by Bank.
If you deposit the whole amount of capital gain in this account and use the same in another property within specified time period there will be no tax. If you are not able to use the same within specified limit, the balance will be treated as income for the year after the expiry of limit.In that financial year only you need to pay advance tax.
3) Yes cost of improvement/furnishing the property also can be added to the cost of property. Please maintain bills for the same.
Regards,
Swagatika
Hi Kirti,
Wishing you a Happy New Year 2015 !
Hope you are doing good.
My father has just sold his house this year and he needs to calculate capital gain tax for the capital gains made and file his IT returns.
He has made a mind to invest his capital gains in Capital Gain tax saving bonds.
We tried to seek professional service of a CA for this purpose. My query is that what would be the expected service fee of CA for such a purpose since CA we consulted has asked for fees that seems be too high. Is there any recommended range of the service rendered by CA. We are unaware of this subject and felt the need to know a reasonable value so that we done feel cheated.
Also, CA has told us that it is a requirement to get valuation done to get the construction cost of the property sold for the purpose of Capital Gain Calculation from a govt-authorized evaluator. Is that mandatory ? We do have receipts of the construction cost incurred from the agreement made between the contractor who constructed the house at the time of construction. Can you confirm this.
Thanks.
Regards,
Gagan
Hello Gagan,
Thanks for your wishes and wish you a Happy New Year Too.
CA charges are varied. Typically for filling ITR with Capital gains I have heard of people paying around Rs 2000.
I am not sure about the valuation part(My CA is on leave so couldn’t get the details. Will update you once I know about it).
Has the house been constructed before 1981?
Hi Kirti,
Wishing you a Happy New Year 2015 !
Hope you are doing good.
My father has just sold his house this year and he needs to calculate capital gain tax for the capital gains made and file his IT returns.
He has made a mind to invest his capital gains in Capital Gain tax saving bonds.
We tried to seek professional service of a CA for this purpose. My query is that what would be the expected service fee of CA for such a purpose since CA we consulted has asked for fees that seems be too high. Is there any recommended range of the service rendered by CA. We are unaware of this subject and felt the need to know a reasonable value so that we done feel cheated.
Also, CA has told us that it is a requirement to get valuation done to get the construction cost of the property sold for the purpose of Capital Gain Calculation from a govt-authorized evaluator. Is that mandatory ? We do have receipts of the construction cost incurred from the agreement made between the contractor who constructed the house at the time of construction. Can you confirm this.
Thanks.
Regards,
Gagan
Hello Gagan,
Thanks for your wishes and wish you a Happy New Year Too.
CA charges are varied. Typically for filling ITR with Capital gains I have heard of people paying around Rs 2000.
I am not sure about the valuation part(My CA is on leave so couldn’t get the details. Will update you once I know about it).
Has the house been constructed before 1981?
Dear Kirti
We have a land in Kerala which was purchased say for approx 30000 per cent around 7 cents of land which works out to Rs 210000/- total cost during the year 2001. In 2015 the land was sold @ Rs 3.00 lacs per cent against the guideline value of Rs 1.50 Lacs per cent plus stamp duty (50%) of the stamp value as per Kerala govt stamp act which works out to be Rs 2.25 Lacs per cent including stamp duty price.
What would be capital gain incurring for a dry land and how much tax one need to pay considering the above calculation.
Dear Kirti
We have a land in Kerala which was purchased say for approx 30000 per cent around 7 cents of land which works out to Rs 210000/- total cost during the year 2001. In 2015 the land was sold @ Rs 3.00 lacs per cent against the guideline value of Rs 1.50 Lacs per cent plus stamp duty (50%) of the stamp value as per Kerala govt stamp act which works out to be Rs 2.25 Lacs per cent including stamp duty price.
What would be capital gain incurring for a dry land and how much tax one need to pay considering the above calculation.
Thanks. Crisp.
Thanks. Crisp.
purchased 2 (small) flats @12,50,000/-each in june 2012 with home loan of 10,00,000/- each. claimed 80C(principal, stamp duty) and section 24(interest) for both as self occupied and deem-let-out during last 2 years.
Again purchased a (large) flat @35,00,000/- in july 2014 with home loan of 26,00,000/-; but before that i have fully repaid and closed earlier 2 home loans (then only got new loan).
Then, sold 1 (small) flat @15,50,000/- in Dec.2014; and panning to sale another (small) flat.
(To save extra capital gain tax, wish to sale second small flat only after March 2015; is it OK?).
Pl suggest how to calculate capital gain(STCG)??? Also, tax calculation regarding reversal of 80C and/or 24 (principal, stamp duty and interest).
To avoid short term capital gain sell it after 3 years ie after june 2015.
If you took property on home loan, claimed the tax deduction for the principal under Section 80C and property is sold within five years, the tax benefits will be reversed.
For example, if you bought the flat in Dec 2010 and in next 4 yrs you saved 1 lac in tax under sec 80C, then this 1 lac will become your income in the year of sale and will be taxed . However interest component once saved is saved and it wont be reversed.
Short Term Capital Gain = Sale Price – (Cost of Acquisition + Cost of Improvement + Cost of Transfer)
purchased 2 (small) flats @12,50,000/-each in june 2012 with home loan of 10,00,000/- each. claimed 80C(principal, stamp duty) and section 24(interest) for both as self occupied and deem-let-out during last 2 years.
Again purchased a (large) flat @35,00,000/- in july 2014 with home loan of 26,00,000/-; but before that i have fully repaid and closed earlier 2 home loans (then only got new loan).
Then, sold 1 (small) flat @15,50,000/- in Dec.2014; and panning to sale another (small) flat.
(To save extra capital gain tax, wish to sale second small flat only after March 2015; is it OK?).
Pl suggest how to calculate capital gain(STCG)??? Also, tax calculation regarding reversal of 80C and/or 24 (principal, stamp duty and interest).
To avoid short term capital gain sell it after 3 years ie after june 2015.
If you took property on home loan, claimed the tax deduction for the principal under Section 80C and property is sold within five years, the tax benefits will be reversed.
For example, if you bought the flat in Dec 2010 and in next 4 yrs you saved 1 lac in tax under sec 80C, then this 1 lac will become your income in the year of sale and will be taxed . However interest component once saved is saved and it wont be reversed.
Short Term Capital Gain = Sale Price – (Cost of Acquisition + Cost of Improvement + Cost of Transfer)
Thanks for encouraging words
Thanks for encouraging words
I have bought a house in 2004 around 12,50,000 and took over in Mar 2006, Sold the house in June 2011 @ 25,00,000. I have lost entire amount + savings in Capital investment Trading and I am not employed during 2011 May to 2014 May.
Please tell me if there is any tax applicable.
Hello Sudarshan,
Assuming you bought house after April 2004
CII of the Purchase Year: 2004 month: Apr : 480
CII of the Sale Year: 2011 month: Jun : 785
Purchase Indexed Cost:2044270.83
Difference between sale and indexed purchase price: 455729.17
Long Term Capital Gain with indexation:91,145.83
This would have been due while filing returns of 2011-12 i.e by Jul 2012
I have bought a house in 2004 around 12,50,000 and took over in Mar 2006, Sold the house in June 2011 @ 25,00,000. I have lost entire amount + savings in Capital investment Trading and I am not employed during 2011 May to 2014 May.
Please tell me if there is any tax applicable.
Hello Sudarshan,
Assuming you bought house after April 2004
CII of the Purchase Year: 2004 month: Apr : 480
CII of the Sale Year: 2011 month: Jun : 785
Purchase Indexed Cost:2044270.83
Difference between sale and indexed purchase price: 455729.17
Long Term Capital Gain with indexation:91,145.83
This would have been due while filing returns of 2011-12 i.e by Jul 2012
Sir,
Thanks a lot Your article on “how to compute capital gain tax” is clear cut,very unambiguous,neat.The words “thank you” , “nice” ,”excellent” are all inadequate to describe the service you are rendering to the society.
t m mayil vakanam
Sir,
Thanks a lot Your article on “how to compute capital gain tax” is clear cut,very unambiguous,neat.The words “thank you” , “nice” ,”excellent” are all inadequate to describe the service you are rendering to the society.
t m mayil vakanam