Sale of property within 3 yrd

Tax queries 385 views 4 replies

Rupesh

GPM

26 Points Posted on 09 April 2014

Hello, I had bought a flat in May 2011 which I have sold in Nov 2013. One of my friends told me that as I am selling the flat in within 3 years, any profit that I gain from it will be taxable under the STCG clause. Let's assume some figures. I bought the flat for Rs. 15,60,000 + Rs 1,00,000 as Stamp Duty & Registration + Rs. 3,00,000 as Interest on Loan which comes up to Rs. 19,60,000. So the flat has cost me Rs. 19,60,000. I sold the same Flat for Rs. 22,30,000 I would like to know how STCG is calculated. My understanding is as follows, please correct me if I am wrong. STCG = Resell Cost - Flat Cost to me = 22,30,000 - 19,60,000 = 2,70,000. Is this correct? If not then please explain how it is calculated. I would also like to get an idea how the STCG will be taxed. Any help is appreciated. Also I have purchased a flat jointly with my Mother in SRA building for Rs. 35,00,000. Please let me know if I can use this for tax exemption purpose.

Thanks in advance.

Regards,

Rupesh Shirke

Replies (4)

Income Tax Wala: (Fin. Expert)

Chartered Accountants

2015 Points Posted on 09 April 2014

Dear Rupesh

first of all you should know that every exemption whether u/s 54, 54F, 54EC etc. is available to long term capital gain only and you have short term capital gain in your case so there is not exemption available to you if buy an another house after selling first house.

secondly there is short term capital gain to you which is taxable at normal rate of income tax slabs.

thirdly as you explained in your example that you have paid some amount as interst. here i would like to say that such interst will not be added to cost of house property.

apart from above mentioned facts you are right.

Rupesh

GPM

26 Points Posted on 11 April 2014

Originally posted by : TAX PANDIT

Dear Rupesh

first of all you should know that every exemption whether u/s 54, 54F, 54EC etc. is available to long term capital gain only and you have short term capital gain in your case so there is not exemption available to you if buy an another house after selling first house.

secondly there is short term capital gain to you which is taxable at normal rate of income tax slabs.

thirdly as you explained in your example that you have paid some amount as interst. here i would like to say that such interst will not be added to cost of house property.

apart from above mentioned facts you are right.

Hi,

Thanks for the information. It means My property Cost will be calculated as Purchase Price + Registration & Stamp Duty Charges i.e.(1560000 + 91200 = 1651200). Please confirm. So my STCG will be Rs.578800. Right? and what about Interest paid till date on home loan is it also added to STCG value or not. and I also show exemption of principal payment & Interest paid through Home loan. So that exemptions also withdrawn or I can use that exemption?

Thanks In advance.

Kind Regards

Rupesh