LTCG investment in under-construction flat
This query is : Resolved
13 June 2011
Dear Experts,
Please help me with the below queries on LTCG. I posted the same query in Income Tax -> Tax Queries but have not received a convincing response yet.
Appreciate your help.
I bought a residential property in March 2005 for 8.6 lakhs and paid stamp duty of 75,000 for it. I sold the same property in June 2010 for 24 lakhs.
I have done the LTCG calculation as below:
Cost of aquisition with indexation= 860000+75000=935000*(711/480)=1384969
LTCG = 2400000-1384969 = 1015031 (Please correct me if the calculation is incorrect)
Though I have paid brokerage and done some improvements to the property, I am not including it in the LTCG calculation as I dont have receipts/proofs for them.
I am planning to buy an underconstruction property/flat that will be completed by Dec 2012 and will be paying an advance of about 10 lakhs to the builder in June 2011.
I have the following queries:
1. As I am paying an advance that is equal to the LTCG to the builder in June2011, will it offset the LTCG or is it mandatory to deposit the LTCG to the capital gain savings account? I understand that the deposit of the LTCG should be done in the savings account before filing the income tax returns, is the same applicable to utlising the LTCG for the new flat?
2. The flat will be ready only in Dec 2012, which is more than 2 years from the date of sale. Will this be considered as a construction of a new house and is 3 years from the date of sale is applicable here
3. The property sold was only in my name but the new flat will be registered jointly in my name and my wife who is a house wife. Will I still get LTCG exemption.
4. How to show this in the income tax returns filing and which form to be used for this purpose.
Thanks in advance,
Senthil Ganapathy
Please help me with the below queries on LTCG. I posted the same query in Income Tax -> Tax Queries but have not received a convincing response yet.
Appreciate your help.
I bought a residential property in March 2005 for 8.6 lakhs and paid stamp duty of 75,000 for it. I sold the same property in June 2010 for 24 lakhs.
I have done the LTCG calculation as below:
Cost of aquisition with indexation= 860000+75000=935000*(711/480)=1384969
LTCG = 2400000-1384969 = 1015031 (Please correct me if the calculation is incorrect)
Though I have paid brokerage and done some improvements to the property, I am not including it in the LTCG calculation as I dont have receipts/proofs for them.
I am planning to buy an underconstruction property/flat that will be completed by Dec 2012 and will be paying an advance of about 10 lakhs to the builder in June 2011.
I have the following queries:
1. As I am paying an advance that is equal to the LTCG to the builder in June2011, will it offset the LTCG or is it mandatory to deposit the LTCG to the capital gain savings account? I understand that the deposit of the LTCG should be done in the savings account before filing the income tax returns, is the same applicable to utlising the LTCG for the new flat?
2. The flat will be ready only in Dec 2012, which is more than 2 years from the date of sale. Will this be considered as a construction of a new house and is 3 years from the date of sale is applicable here
3. The property sold was only in my name but the new flat will be registered jointly in my name and my wife who is a house wife. Will I still get LTCG exemption.
4. How to show this in the income tax returns filing and which form to be used for this purpose.
Thanks in advance,
Senthil Ganapathy
13 June 2011
1. As I am paying an advance that is equal to the LTCG to the builder in June2011, will it offset the LTCG or is it mandatory to deposit the LTCG to the capital gain savings account? I understand that the deposit of the LTCG should be done in the savings account before filing the income tax returns, is the same applicable to utlising the LTCG for the new flat?
*
Reply- When you are utilising the amount of capital gains towards purchase of residential house in this month only, it will be deemed that you have purchased a residential house in June 11.
After or before that you are not required now, to open Capital Gains A/c for depositing the capital gain. You can avail exemption U/s 54.
*
Reply- When you are utilising the amount of capital gains towards purchase of residential house in this month only, it will be deemed that you have purchased a residential house in June 11.
After or before that you are not required now, to open Capital Gains A/c for depositing the capital gain. You can avail exemption U/s 54.
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13 June 2011
2. The flat will be ready only in Dec 2012, which is more than 2 years from the date of sale. Will this be considered as a construction of a new house and is 3 years from the date of sale is applicable here.
Reply-2- The only requirement is purchase of residential house within 2 years. You take it as if purchased in June 2011 in spite of the fact that construction will be completed in Dec 2012.
Reply-2- The only requirement is purchase of residential house within 2 years. You take it as if purchased in June 2011 in spite of the fact that construction will be completed in Dec 2012.
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13 June 2011
3. The property sold was only in my name but the new flat will be registered jointly in my name and my wife who is a house wife. Will I still get LTCG exemption.
*
Reply- Income Tax Act does not have any objection in adding your wife's name in your property. It requires that the investment upto the amount of capital gains, should ,at least, be made by you.
*
Reply- Income Tax Act does not have any objection in adding your wife's name in your property. It requires that the investment upto the amount of capital gains, should ,at least, be made by you.
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13 June 2011
4. How to show this in the income tax returns filing and which form to be used for this purpose.
Reply- The capital Gains are to be shown under the Schedule CG of capital gains. In case you are a salaried person -ITR-2 will be applicable.
In case you take services of Expert CAs in this matter, you will be more comfortable.
Reply- The capital Gains are to be shown under the Schedule CG of capital gains. In case you are a salaried person -ITR-2 will be applicable.
In case you take services of Expert CAs in this matter, you will be more comfortable.
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14 June 2011
Thanks a lot for your detailed response.
This clarifies all my doubts.
I am in Bangalore and willing to take services of CA related to this and for other tax consultation.
Can you provide reference of good reliable Chartered Accountant or Tax consultant in East Bangalore (Indira Nagar area) who can be of help.
Thanks and Regards,
Senthil Ganapathy
This clarifies all my doubts.
I am in Bangalore and willing to take services of CA related to this and for other tax consultation.
Can you provide reference of good reliable Chartered Accountant or Tax consultant in East Bangalore (Indira Nagar area) who can be of help.
Thanks and Regards,
Senthil Ganapathy
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