Sale of tenancy right house

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afreen shaikh

139 Points Posted on 16 February 2024

1 Assesee acquired Capital Assets i.e tenancy right by inheritance i.e. from father under family statement and paid Rs.500000/- to other legal hiers on 19th November 1998 for tenancy right in residential Room in proper room.

2 In July 2005 one builder jointly with the landlord of the building agreed to convert this tenancy right into ownership right at NIL cost to assessee under the project of redevelopment of building and builder issued new flat in redeveloped building in the year 2010.

3 Now the flat is sold in the year 2023-24. What will be the cost of the flat??

A )Since the tenancy right is acquired prior to 1st April 2001 can assessee take FMV as on 01-04-2001 and then to arrive at index Cost of Flat in 2023-24 for computing LTCG- by applying Sec55(2)(a).

OR

B) since the ownership right is Created in 2005 then so take FMV in 2005 as cost of purchase and apply cost of indexation and arrive at indexed cost of flat in 2023-24 for computing LTCG- BY Applying Sec. 55(2)(b).

Replies (3)

Quick Summary

This discussion explores how to calculate the cost of a redeveloped flat for Capital Gains Tax purposes when the original asset was a tenancy right acquired through inheritance. The key question is whether to use the Fair Market Value (FMV) as of April 1, 2001, or the FMV when ownership rights were established in 2005, to determine the indexed cost for Long Term Capital Gains (LTCG).

Saravanan nagaraj

332 Points Posted on 17 February 2024

There was no cost of purchase the land & building. It was came from his inheritance. He paid amount to his other legal heirs in gift deed which was treated as unaccount settlement. Gift deed zero cost of purchase or without consideration.

Gift deed was actually registered on 2005. Just follow your option (B).

Building value has depreciation. But land value has appreciation. To workout your flat cost.

Need to know per sq ft construction charges. Then, You can add other charges like maintenance of the property so on.

Purchase cost is zero.