If a building is completely destroyed/demolished (not by the owner!) by accident or vandalism, how to claim loss for it in taxes? If it was built in 1980's, will it be long term capital loss?
Do I take cost of the building as of the year constructed (assume 1981) and multiply it with indexation thing of that year? Or do I take valuation of the building as of the current year and show the loss as that?
See, First of all the Capital Gains Tax is charged on TRANSFER of asset. where a building is destroyed, it is not transfer of property.
But it can be claimed as though you have disposed off the building.
In your case, it will be Long Term Capital Loss.
The cost of acquisition will be Fair Market Value as on 01.04.1981 (as indexed)
Current Value cannot be considered.
Regards
Prateek
It can be treated as extinguishment of asset and capital loss can be claimed, though it is doubtful if this is of any practical value.
| Originally posted by : Member | ||
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It can be treated as extinguishment of asset and capital loss can be claimed, though it is doubtful if this is of any practical value. |
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Why is it doubtful that it would be of any practical use?
CAclubindia
