Capital Gains on Property Sale

Dear George,

Capital Gain will be Long Term....since it has been held that ACQUISITION  is different from OWNERSHIP & defination of capital assets requires asset to be HELD by the assesse & not OWNED by the assessee........

Computation =

Sale Price  = 52 Lacs

ICOA = 35 Lacs *632/497

Now stamp duty paid by u can be claimed as cost of improvement & indexed from FY 2008-09

Duty*632/582

Cost= 32 lakhs i.e actual cost.

Long term or Short term Capital Asset= Period of holding should be consider from the date when u get possession of house property i.e 2005. So, it is your Long term capital.

So, Calculate your capital gain after considering Cost of Indexation.

Ameet - Thank you for your reply.

I wish to add that at the time of purchase in 2005, the apartment was still under construction. The final possession by builder was given in Jan 2007. Will it in any way change the case ?

Secondly if there is a Capital Gain of 591,667 as per your calculcation, can't I reinvest it in some bonds/ other residential property to avoid tax? If so how much time will I have to redeploy that gain ?

Dear Amir

Can we claim registration exp. as cost of improvement,  if u claimed it U/s 80 C?????

Dear George

If u got the posession in 2007 then indexation would be done from 2006-07 only. Yes u can avoid it by investing in Notified Bonds u/s 54EC......OR BY INVESTING IN NEW HOUSE PROPERTY......

Now coming to friend Saurabh,

There is double benefit in the act........

Y u consider only duty portion my friend, first u can claim principal as deduction u/s 80C & then u r allowed cost to be reduced for computing capital gain.......Just becos of this double benefit New Direct Tax code is not providing any benefit on principal repayment..

Thanks. Please let me know if both stamp duty and registration amount can be treated as cost of improvement.

Please advise if below calculation is correct ?

Amir, Thanks for your answers...

Is there a timelimit within which I have to re-invest the gain. For example if I receive gains in Feb 2010, then how much time do I have to reinvest it ?

Do I need to do it before the end of current financial year or will I have 12 months i.e. till Feb 2011 ?

Thanks in advance,

yup, it correct.

Dear George,

In case of Bonds investment is to be made with in 6 months from the date of sale..

Whereas New Proper can be purchased within 2years or can be constructed with in 3 years from the date of sale...(But before filing return of income unutilized has to be deposited in a capital gain account scheme with bank in this case)

Yes, u can avoid tax by investing in

another residential property u/s. 54

Purchase :

1 year back ward or 2 yrs after date of transfer or 3 yrs after date of transfer in case of construction of nre property.

Invest in NHAI or Rural Electrification u/s. 54EC

Purchase

6 m from the date of transfer.