Capital Gains on sale of inherited house

957 views 18 replies

Acpt

32 Points Posted on 12 July 2011

I inherited a house from my uncle. Since my uncle did not leave any will for this house (residential apartment), i had to claim this house and got legally transferred in my name- the share certificate was transferred in my name after completing all the legal formalities required by the society.

This house was bought by my uncle somewhere in 1988 and he expired in 2006. I got this house transferred in my name in around 2008. I eventually sold this house in 2010 for Rs. 10,55,000.
Part of the amount I received from the sale proceeds- Rs. 925000 I part paid my home loan, rest was used up for other requirements I had.

Now, I need to know what income tax liability i stand for this income source. I understand that there would a Long Term Capital Gain & indexation required to be done.

Please explain with calculations as I do not understand the indexation thing completely.

Replies (18)

Sunshine

Helping All

10575 Points Posted on 12 July 2011

u need to tell the actual cost of the house for us to do the calculations..

vipul patel

Ahmedabad

320 Points Posted on 12 July 2011

yes this is LTCG for calculation cost of aquision is buying price of your father and cos is 10,55,000 and Remember for Indexation take the date of frist holding i.e. 2008

Acpt

32 Points Posted on 12 July 2011

I will have to see the original agreement for this..

Since I am at work now & do not have access to it, let us assume it to be say Rs. 2,00,000

Also, I have spent considerably while claiming this property - like paying the maintenance, brokerage fees, lawyer fees, advertising in newspaper etc. believe I can show this as expenses while claiming ? If yes. how do i prove these expenses if at all I get a scrutiny.

Please consider an amount of say Rs 75000 as expenses in your calculations..

Sunshine

Helping All

10575 Points Posted on 12 July 2011

i am afraid u won't be able to claim the expenses...... cost of improvement are after the date u acquire the property and for its improvement or modification....

Acpt

32 Points Posted on 12 July 2011

Originally posted by : Sunshine...
	i am afraid u won't be able to claim the expenses...... cost of improvement are after the date u acquire the property and for its improvement or modification....

I think we can also claim for expenses other than improvement - for instance lawyer fees, brokerage etc,,

Anyways, please calculate - with & without expenditure

Sunshine

Helping All

10575 Points Posted on 12 July 2011

sale receipts- 1055000

less indexed cost- 200000*711/582= 244330

long term cap gain- 810670

Acpt

32 Points Posted on 12 July 2011

Originally posted by : Sunshine...
	sale receipts- 1055000 less indexed cost- 200000*711/582= 244330 long term cap gain- 810670

How about Rs 925000 I have used for paying off my home loan. This should be considered as 'Investment in a property' ?

Sunshine

Helping All

10575 Points Posted on 12 July 2011

no it wont be considered an investment in a property..so section 54 is out of equation....u can claim 80C dedcution if the loan fulfills the criteria..

Acpt

32 Points Posted on 12 July 2011

Can you please elaborate on this please ?

U S Sharma

glidor@gmail.com

21068 Points Posted on 12 July 2011

cost of improvement means the expenses made for improvement of property with which the property gain its utility,

with the expenses you made, there is no addition to utility of property, so its not to be added to cost nor to be deducted from LTCG

at 810600 you have to pay LTCG taxc @ 20% flat rate

Acpt

32 Points Posted on 16 July 2011

Originally posted by : U S Sharma
	cost of improvement means the expenses made for improvement of property with which the property gain its utility, with the expenses you made, there is no addition to utility of property, so its not to be added to cost nor to be deducted from LTCG at 810600 you have to pay LTCG taxc @ 20% flat rate

so i need to pay Rs 162120 as tax ? or add this amount to my taxable income and then cohmpute the tax as per the slab i fall into ?

U S Sharma

glidor@gmail.com

21068 Points Posted on 16 July 2011

	Short-term Capital gains tax	Long-term capital gains tax
Sale transactions of securities which attracts STT:-	10%	NIL
Sale transaction of securities not attracting STT:-
Individuals (resident and non-residents)	Progressive slab rates	20% with indexation; 10% without indexation (for units/ zero coupon bonds)
Partnerships (resident and non-resident)	30%
Individuals (resident and non-residents)	30%
Overseas financial organisations specified in section 115AB	40% (corporate) 30% (non-corporate)	10%
FIIs	30%	10%
Other Foreign companies	40%	20% with indexation; 10% without indexation (for units/ zero coupon bonds)
Local authority	30%
Co-operative society	Progressive slab rates