How to calculate capital gains on selling a self built building

561 views 2 replies

Chinmaya Kumar

3 Points Joined July 2022

I am planning to sell a flat in the next month for 40 lakhs. This house having 3 floors was built in year 2002 on a plot purchased at 2 lakhs. The approximate cost to build a house was about 10 Lakhs, however I don't have any receipts for the same. But 1 floor was sold in 2004 for 4 lakhs for which i have the documents available.

I would appreciate your help on clearing following points How do I calculate the indexed value of this house? Can i use the 4 lakhs of 2004 as the basis for indexing? Or While mentioning the acquisition cost on IT form, do I have to provide the receipts to justify the cost of building the house? How do I show my capital gain in IT return? I am planning to buy NHAI bonds worth [selling price (40 L) - indexed cost (12L)] to save capital gains tax, would that be a suitable way to proceed?

Thanks

-Chinmaya

Replies (2)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9596 Points Joined December 2011

Long term capital gains on the sale of a house can be calculated as follows:

Particulars	Amount in Rupees
Sale price of the house	XXXXXX
Less: Any transfer expenses such as brokerage, commission etc	XXXXXX
Net Sale Consideration	XXXXXX
Less: Indexed acquisition cost of the house	XXXXXX
Less: Indexed house improvement costs	XXXXXX
Gross Long Term Capital Gain	XXXXXX
Less: Any exemptions available under sections 54, 54B, 54D, 54EC, 54ED, 54F, 54G	XXXXXX
Net Long Term Capital Gain	XXXXXX

Chinmaya Kumar

3 Points Joined July 2022

Hi Rama,

Thank you so much for taking out the time to reply, it's really helpful!
I have still one doubt mainly in regards to coming up with Improvement costs, I don't have the receipts for it, but i did sell one of the floors out of 3 at 4 lakhs in the next year(2004) the house was built(2003). So can i use that as basis for getting 4 lakhs as Acquisition Cost + House Improvement per floor and then index on 4L i.e 4*(317/105) to get the indexed value? Or would there be some other approach i would have to take to get the valuation of floor?

Thanks in Advance