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Taxes for Real Estate Business

Tax queries 396 views 1 replies

Hi,.... If a person owns an Apartment which has Flats,Shops and Offices in it and if he wants to make business with the Apartment through following ways

  1. By selling some of the flats directly who wants to purchase it and making registration with their names
  2. By selling some of the Flats and Shops on Installments that is by providing schemes and sell based on Installments, i mean the person who wants to purchase the Flat or an Office has to purchase by paying EMI to owners upto certain period as fixed by Seller.
  3. By Renting some of the Shops or Flats 

I have certain questions below which i need to be answered 

  1. In the first case as stated above what taxes do i need to pay if i sell flats directly by getting payment and making purchasers registration i mean do i need to pay Capital Gains Tax or else tax on ordinary income
  2. When i Sell some of the Flats on Installment and the Installment Scheme is of 3 Years and the Purchaser of       the flat will be paying EMI for 3 years and the flat will not be registered on purchasers name untill he pays all the Installment and at the end of the scheme the flat will be registered on the purchasers name.., Now what taxes do seller need to pay for the flat untill the Scheme gets completed also After the Purchaser pays whole payment through EMI's (Scheme for 3 Years) and the Seller wants to register the flat for Purchaser at the end of 3 years. At that time what taxes has to be paid by seller
  3. When i rent some of the flats i am getting income in the form of rental what taxes should i need to pay
  4. Lastly, when the Capital Gains Taxes are applicable

Please answer my Questions as i am very much in need of this, Thanks in Advance smiley

Replies (1)

Dear Friend,

1. It depends on the way you have disclosed the asset in the books of accounts. If you have shown as inventory then business profits will have to be declared. If you have shown as asset then capital gain tax will apply.

2. Even if the installment scheme applies you will have to pay capital gain tax in the year of reciept of initial consideration. This is due to even handing over possesion gives rise to capital gain tax. It does not matter whether you recieve the balance amount at the end of 3 years.

3. In this case you will have to pay taxes under income from house property.

Hope this helps you.


CCI Pro

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