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Capital gains in case of Joint Development Agreement

Tax queries 524 views 2 replies

Hi

There is a Joint development agreement for sale of land + old residential property. The old property is demolished and new property is being constructed. In this case will the cost of acquisition includes cost of construction of old property for capital gains calculation. Also the exemption can be claimed under Section 54 or Section 54F of Income tax act.


Thanks

Replies (2)
Quick Summary
In a Joint Development Agreement involving demolition and reconstruction of a residential property, the cost of acquisition generally includes both land cost and the indexed construction cost of the old house. Capital gains exemption is usually available under Section 54 for residential property transfers.

  • Cost of Acquisition: Includes both the land cost and the construction cost of the demolished house (with indexation).

  • Exemption: Claim under Section 54, as the asset being transferred is a residential house.

  • Timing: Tax is generally payable in the year the Completion Certificate is received.

Thank you so much for the clarification


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