Hi Sreekanth,
I read your article on Capital gain calculation and need on clarification on what to consider for initial cost of Asset.
I bought a house in Sep'2011 and plan to sell this year.
When I initially bought the house SALE DEED will have cost of the land and its registered. We also have Construction Agreement to build the house which is not registered.
- Cost of purchase we can include the Sale Deed and Construction cost?
- For 80C being taxed before 5 years, How the 5 years calculation is done? 5 Financial year are duration between purchase & selling of property.
- What is Cost of Improvement in LTCG?
2 Answers
Hi,
1 - You can consider Cost of land as Cost of initial acquisition cost.
The building cost can be considered as 'cost of improvement'. If you are unable to get the correct value of house, you can get the valuation done by an govt approved 'Property Valuer'.
You can use indexation benefit to arrive at these figures.
2 - You are selling the property after fiver years right??
if you sell your residential house within five years, you may have to forgo your tax benefits. The entire amount of deduction claimed under Section 80C in prior years on the amount of the principal repayment will be added to the taxable income in the year of sale of the property. Also, no income tax deductions shall be allowed in respect of repayments made during the year of sale of the property.
Kindly note that this rollback is applicable only to deduction(s) claimed under Section 80C. Deductions claimed under Section 24 (b) on interest payable on your home loan will not be withdrawn.
Hi,
Kindly note that there is no need to submit any documents or proofs along with ITR. But you need to save the construction agreement and/or any other Bills (construction expenses) to support your claim.
Kindly note that it is not 'FY' but 'date of possession' which matters ..
If you sell a property before 5 years from the date on which the possession has been given to you, the tax benefits claimed by you earlier would be reversed and you would be required to pay tax on the benefits availed earlier
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Am plan to sell the house housing loan is in progress. How the capital gain is considered in this case?