Capital gain tax for sale or property

Computation of Long Term Capital Gain

Sale consideration = Value to be put

Less:

Indexed cost of acquisition (land) = Rs. 703,297/- (125,000 x 1024 / 182)

Indexed cost of acquisition (house) = Rs. 16,72,361/- (325,000 x 1024 / 199)

Indexed cost of improvement = Rs. 364,412/- (100,000 x 1024 / 281)

Indexed cost of improvement = Rs.526 478/- (200,000 x 1024 / 389)

LTCG = Answer (provided you sell the house along with the land in the FY 2014-15.

Thanks a lot Mihir,

That cleared most of doubts. Have one more question

Lets say we sold the house+land for 50 lakhs, if I understand correctly we need to pay capital gain of 20% for approx 17.5 lakhs(considered total index value is approx 32.5 lakhs). To avoid capital gains, I was told that we can reinvest in another residential property. My question here is do we need to invest entire 50 lakhs in another residential property or is it ok if we invest 17.5 lakhs?

Thanks in Advance

Originally posted by : Mihir
	Computation of Long Term Capital Gain Sale consideration = Value to be put Less: Indexed cost of acquisition (land) = Rs. 703,297/- (125,000 x 1024 / 182) Indexed cost of acquisition (house) = Rs. 16,72,361/- (325,000 x 1024 / 199) Indexed cost of improvement = Rs. 364,412/- (100,000 x 1024 / 281) Indexed cost of improvement = Rs.526 478/- (200,000 x 1024 / 389) LTCG = Answer (provided you sell the house along with the land in the FY 2014-15.

No, not on 50 lacs. If you do not reinvest LTCG or 17.5 lacs, then 20% tax is payable on 17.5.

20% tax is on capital gain and not on sale value.
 

Thanks once again Mihir :)

Mihir is correct provided you did not take Repayment of Housing loan deduction u/s.80C in any previous years. Indeed you need to deduct such amount from cost of acquisition while computing capital gain.

Hi Ayyappa,

I was told that we need to deduct repayment of Housing Loan Deduction, if property sold before 5 years, not after. Can you please clarify?

I am little confused here as my father did take benefit of home loan for past 20+ years from tax angle. Do we need to deduct all the years as that could probably same or more than cost of acquision.

Thanks,

Chetan

Originally posted by : Nuli Swami Ayyappa
	Mihir is correct provided you did not take Repayment of Housing loan deduction u/s.80C in any previous years. Indeed you need to deduct such amount from cost of acquisition while computing capital gain.

If you take repayment of housing loan as deduction u/s.80C, you should hold the property for which you have taken loan for a period not less than 5years. If you sold such house with in 5years from the date of purchase or construction, the aggregate of all deducions availed u/s.80C in this regard taxed as income in the year in which you transfer the property. As your father taking such benifit for a past period of 20years, no problem in this regard. so while calculating capital gain, you should deduct aggregate of deductions availed from the cost of acquisition while computing Long term capial gain and invest such capital gain amount in residential property to avail benifit u/s.54. It is to be noted that if you can not purchase or construct house before the date of filing return you should invest amount in Capital Gain Depository Scheme and use money form such account when ever you need for constructin or purchase of house property.