Query on capital gain tax for sale of property

Tax queries 2335 views 3 replies

Bharati

Senior Manager

24 Points Joined July 2013

Hi people...

I wanted on some details on capital gains computation

There is this flat owned by my sister where the Sale and construction agreement signed with builder in March 2006. Occupancy certificate given in Jan 2009. Property sale deed registered in July 2009.

1. The sale deed only mentions the land value (of flat's proportionate land area of overall land) and does not cover the construction value. Will this pose a challenge in terms of capital gains computation? Hope I can use the full value - Land+construction+enhancement+brokerage etc to get at the full acquisition value? For the enhancements, brokerage, other expenses do I need to have/maintain any documentation (bills etc)?

2. To calculate indexation do I use sale agreement date, property registration date, occupancy or possession date?. Though i think it should be sale agreement date since registration is more like a process and the ownership / transfer has already been affected on sale agreement date. pls confirm

3. If the sale amount mentioned by me for IT purposes differ from the amount in the sale deed with the buyer which will most likely be based on stamp duty purpose , technically it may result in a capital loss due to high indexation . Is this observation correction

Replies (3)

Mihir

Wealth Manager

5293 Points Joined December 2008

Correct me:

Your sister booked a flat with a builder in 2006. In 2009, the builder obtained OC. In 2009, the sale agreement was registered. And now she wants to sell the flat. The cost of acquisition shall be the payment made to your builder to book and purchase the flat. Since she has kept the flat for over 3 years, she will have long term capital gain. Now it depends on the MOU signed between your sister and the builder for delivering the flat within a predetermined period and at what terms and price.

To compute that, one is to take the cost of acquisition, expenses on transfer, cost of improvement if any, and substract it from the sale consideration to arrive at the long term capital gain. The sale value should not be less than the stamp duty value.

Rani

None

320 Points Joined January 2012

Hello,

If cost of a flat (under construction ) is paid through instalments, which would be the purchase date for LTCG calculation?

Flat Allotment date?

Sale agreement date?

Occupancy date/final payment date or Registration date?

Thanks in advance.

Punguluri Prasad

2 Points Joined December 2017

Sir , my name is P.Prasad, and I purchsed a plot in 2003-04 at Hyderabad for Rs 1.02 lakhs and proposing to sell it off in 2018-19 for around Rs 40 lakhs.. Sir the layout has been developed by a society and it is charging around 6 lakhs dowards development charges. Foll are my queries:

1) what is the capital gain

a) without development charge

b) with consideration of development charge. ( The development charge is being leveid at the time of sale of plot being proposed in 2018-19)

2) Now can the etrie capital gain be invested in construction of Ist and 2nd floors of my existig house which is currently having only ground floor constructed in 2012. Or should the entire capital gain needs to be invested in a new property only. Kindly clarify whether complete capital gain tax exemption.is permisssible or not if utilised in construction over existing house as stated above.