Capital gains

Tax queries 644 views 4 replies

Akash

XYZ

41 Points Posted on 23 October 2013

Can I consider the cost of home renovations in calculating my capital gains. I bought my house in 1994 for Rs.200,000. I completely renovated it by paying another $40,000 in 1994 before I moved in. THen I renovated it again in 2000 and 2006. House renovation only included painting, changing windows, doors, kitchen kaddappa, bathroom. It does not include any furniture or fittings. Can i use the inflation index for the year in which i renovated my house? I do not have any receipts as most of it was payment to contractors in cash.

Replies (4)

Mihir

Wealth Manager

5293 Points Posted on 23 October 2013

Major renovation, extensions can be included in cost of improvement and accordingly indexed in computing capital gains. The question is in case your AO wants to look at the bills of these renovation, then what will you do.

CA Pallav Singhania

IT System Auditor

33683 Points Posted on 23 October 2013

Agree with Mr. Mihir ji,

Cost of improvement does not mean normal repairs.

As far as records are concerned, it is said that even Rs.100 petrol bill should be kept as documentary proof.

So without documentary evidences,ITO can disallow the improvement cost leading to tax consequences with interest as well.

Cost of improvement, as the name suggest, does n't mean normal repairs.

Read more at: /forum/cost-of-improvement-capital-gains-162444.asp

Komal Sharma

Assistant Accountant

1887 Points Posted on 23 October 2013

Cost of renovation cannot be considered as Cost of improvement as Cost of Improvement doesn't mean repairs n maintenance in case of calculating Capital Gain under Income Tax Act.

Agree with Aryan Sir...