SALE PROPERTY CAPITAL GAIN

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This discussion clarifies how to calculate capital gains tax when one joint owner of a property buys out their brother's share. The compensation received by the selling brother is considered the sale consideration. Capital gains are then calculated by deducting proportionate costs of acquisition and improvement, with indexation applied if the property was held for over 24 months. Importantly, if the original agreement was based on a gift, there is no tax liability.

pratik

pratik (Querist)

13 July 2021 bother is joint owner of property .some dispute between brother .one bother wanted to remove his bother name from the agreement given compensation on the basis ratio as per agreement .so i want to know that how to calculate capital gain in this case .

Deepa B

Deepa B (Expert)

13 July 2021 Capital gain calculation needs to be done for the brother who is selling his portion of property to the other. In such case sale consideration will be the compensation received. Then cost of acquisition and improvement has to be claimed proportionately corresponding to his share of property. If period of holding such immovable property is more than 24 months, then indexation of the such values will be calculated and considered to arrive at the capital gain/ capital loss.