Short term capital gain on property
Querist : Anonymous
If I sell a property (no possession yet, no registry) can I adjust interest paid on home loan against the premium gained? For example, if I get 10 lac premium on selling my property (cost:80 lac, sold at: 90lac, for example) and in this period, if I have paid 5 lac as interest on home loan, will the short term capital gain be 5 lac or 10 lac? Note the property is not 3 years old.
Another question is, if the possession is not provided by the builder, how does one calculate the number of years of acquisition of the property? For example, if I bought my property in June 2011, will I get exemption from short term capital gain after June 2014 even though the builder hasn't offered possession at the time?
2. The interest is to be added to the cost of the "right" to arrive at actual gain/loss. Given that interest against which deduction has been claimed under section 24 too is allowed as a deduction while computing capital gains, there is no reason to disallow the same while computing the cost of "right" in a property.
other views are solicited.
Querist : Anonymous
Thanks for the prompt response. This is excellent forum for less informed users like us.
Just to understand it correctly, you made two points.
1) The "right" to property starts from the day of initial agreement with the builder and the property can be deemed taxable under LTCG after a 3 year period
2) The home loan interest can be deducted from the proceeds of the sale to calculate the actual gain/loss.
Querist : Anonymous
Thanks for the prompt response. This is an excellent forum for less informed users like us.
Just to understand it correctly, you made two points.
1) The "right" to the property starts from the day of initial agreement with the builder and the property can be deemed taxable under LTCG after a 3 year period
2) The home loan interest can be deducted from the proceeds of the sale to calculate the actual gain/loss.
Querist : Anonymous
Indexation also applies for STCG? or only for LTCG
This is getting confusing for me slightly. Currently the property is 2.5 years old (using the "right" to property principle you just mentioned). If I sell the property now, and for example get 10 lac premium from the proceeds and so far have paid 5 lac as interest, how do I calculate the STCG?
Querist : Anonymous
Please answer my previous query on calculation of STCG.
Profits from sale: 10lac
Interest paid: 5 lac
STCG is on 5 lac or 10 lac?
proceeds Rs 90 lakhs
profit: 5 lakhs
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