How to save Capital Gains Tax on Sale of Land / House Property?
Capital assettypically refers to anything that you own for personal or investment purposes. It includes all kinds of property; movable or immovable, tangible or intangible, fixed or circulating.
Examples include a house, land, household furnishings, stocks, bonds or mutual funds held as investments etc.,
When you sell a capital asset, the difference between the purchase price of the asset and the amount you sell it for is a capital gain or a capital loss. Capital gains and losses are classified as long-term or short-term.
If Land or house property is held for 36 months or less24 months or less(w.e.f. FY 2017-18)then that Asset is treated as Short Term Capital Asset. You as an investor will make either Short Term Capital Gain (STCG) or Short Term Capital Loss (STCL)on that investment.
If Land or house property is held for more than 36 monthsmore than 24 months(w.e.f FY 2017-18 / AY 2018-19) then that Asset is treated as Long Term Capital Asset. You will make either Long Term Capital Gain (LTCG) or Long Term Capital Loss (LTCL) on that investment.
You may have to pay Capital Gains Tax on STCG / LTCG.
In this post let us understand – How to calculate Short Term capital gains on sale of land or property? How to calculate Long Term Capital Gains on sale of land or house? What are the applicable capital gain tax rates on sale of land / house property? How to avoid / save / minimize capital gains tax on sale of land or flat?
How to calculate Capital Gains on sale of Land or House property?
Short Term Capital Gains Calculation is calculated as below:
STCG = Total Sale Price – Cost of acquisition – expenses directly related to sale – cost of improvements.
Long Term Capital Gains Calculation;
The LTCG calculation is similar to STCG. The only differences are, you are allowed to deduct Indexed Cost of Acquisition/Indexed Cost of Improvements from the sale price and also claim certain exemptions to save capital gains tax.
With effective from Financial Year 2017-18, the base year for calculation of Indexation is going to be 2001.
(Indexation is done by applying CII – cost inflation index. This increases your cost base ie purchase price and lowers your gains. Your purchase price is adjusted for the impact of inflation.
How do you calculate the indexed cost of purchase? The indexed cost is calculated with the help of a table of cost inflation index.
Divide the cost at which you purchased the Property by the index as on the date of the purchase. Multiply this by the index as on the date of sale.
For Example : If purchase year is 2011 and year of sale is in Financial Year 2015. Then indexed cost of purchase would be –
Below is the Cost Inflation Index Table from 2001-02 to FY 2020-21 for your reference. Cost Inflation Index (CII) for FY 2020-21/ AY 2021-22 Notified by CBDT at 280.
What are the applicable Capital Gains Tax Rates on Sale of Property AY 2021-22?
Short Term Capital Gains are included in your taxable income and taxed at applicable income tax slab rates.
Long Term Capital Gains are taxed at 20%.
How do I save Capital Gains Tax from sale of Property?
Capital gains tax on Short term gains is unavoidable and no exemptions are available to minimize your tax liability. However, you can claim deductions to lower the tax liability on long-term gains.
How to save Capital Gains Tax by claiming Exemption u/s Section 54EC? (Applicable to LTCG only, on sale of both land / house property / commercial property)
Capital gains from sale of any long-term asset can be claimed as tax-exempt under Section 54EC of the Income-Tax Act by investing in notified bonds within six months of the transfer of Asset.
These bonds are issued by the Rural Electrification Corporation and the National Highways Authority of India.
The exemption is equal to the investment or the capital gain, whichever is lower. If you transfer or take a loan against these bonds within three years, the capital gain will become taxable.
These are redeemable after 3 years and must not be sold before the lapse of 3 years from the date of sale of the house property. The Bonds issued u/s 54EC for saving of LTCG on sale of property will now have a lock-in period of 5 years instead of 3 years from FY 2018-19.
You are allowed a period of 6 months to invest in these bonds, but before the Income Tax Return filing date (to claim this exemption).
You can invest a maximum of Rs 50 lakhduring a financial year in these bonds as per Budget 2015-16.
How to save Capital Gains Tax by claiming Exemption u/s Section 54? (Applicable to LTCG on sale of house property only)
You can use the entire Long Term Capital Gain proceeds on sale of a residential house to buy another house property (residential property) to save Capital Gains tax. Below conditions need to be satisfied though;
The new house has to be bought one year before(under-construction property) the transfer of the first house or within two years after the sale. (For an Under construction property or flat , the construction has to be completed within three years of the transfer of the first property.)
The deduction allowed is equal to the actual investment or the capital gain, whichever is lower.
If you plan to use the gain to build a house, it has to be done within three years of the sale of the property. Do note that ‘cost of land’ can be included in the construction cost.
How to save Capital Gains Tax u/s 54F?(Conditions applicable to LTCG on sale of Land or Commercial Property)
Below conditions need to be satisfied in case you sell land and are planning to buy a residential home.
You can use the entire sale proceeds (received by selling a plot / land) to buy a new house or to build a new residential house.
If you use a part of the money, the deduction will be proportion of the invested amount to the sale price.
The time-frame for investment is the same as that for capital gains from residential property.
You should not own more than one residential house prior to this investment.
The deducted capital gain (from sale of land) becomes taxable if you buy another house (other than the new one) within two years of the transfer of the original asset or construct a new one within three years.
If the new house is sold within three years, the deduction claimed will become taxable as a long-term gain.
This new house purchased or constructed must be situated in India.
The proceeds should not be invested in a commercial propertyor in another vacant plot.
How to Save Long Term Capital Gains Tax without buying another House Property?
If you are unable to invest the sale proceeds in any of the above options before the date of income tax returns filing , you can deposit the CAPITAL GAINS (not entire sale proceeds) amount in a public sector bank or other banks as per the Capital Gains Account Scheme- CGAS, 1988.
The capital gain (full amount or utilized amount)can be deposited in CGAS account.
This is only a stop-gap arrangement, as the funds have to be used to buy or build a house within the period specified.
The deposited money can be used only to buy or construct a residential house within the prescribed time frame.
If you withdraw funds from this account, they have to be used within 60 days.
If you do not utilize the amount within three years of the sale of the first property, such un-utilized amount will be treated as LTCG this will lead to taxation of the unutilized amount as long-term capital gain after three years of the sale of the first / original property.
The interest rates paid on these accounts are the same as those on regular savings and term deposits. Kindly note that interest earned on this account is taxable.
How to Save Long Term Capital Gains Tax under New Section 54GB(5)?
Under Section 54GB(5) of the Income Tax Act, 1961, long term capital gains on the sale of residential property will be exempt if the sale proceeds are invested in a eligible startup, provided such transfer took place prior to March 31, 2019. As per the latest full Budget 2019-20, this has now been extended to March 2021.
Important points on Capital Gains Tax & Sale of Land / Home
Agricultural land in a rural area in India it is not considered a Capital Asset, and therefore no capital gains are applicable on its sale.
While calculating capital gains, expenses related to transfer / sale like advertisement expenses, brokerage expense, Stamp duty, Sale deed registration fees, Legal (lawyer) expenses etc., can be deducted from the Purchase price.
Sale of a property that is inherited or accepted as a gift will also attract capital gain/loss provisions even though you haven’t spent any money to acquire it. In such a case, capital gains will be computed on the basis of the cost to the previous owner, indexed to the year of purchase.
If the cost of the new residential property is lower than the total sale amount, then the exemption is allowed proportionately.
The new property must only be bought on the name of the seller and not on anybody else’s name. Joint ownership can be acceptable but exemption can be limited to the share of ownership.
You must also remember that you are allowed to purchase or construct only one new asset from the capital gain that accrues. This means that you cannot make multiple property acquisitionsand thus seek to reduce your tax outgo. However, if you sell more than one property, you can invest the resulting cumulative capital gain amount in a single new property.
If you use the capital gain amount to clear loansthen tax on LTCG cannot be saved. No exemptions can be claimed.
Capital Gain Tax cannot be saved if the sale proceeds are invested in a commercial property, agricultural land or plot.
According to the latest amendments in the Income Tax Act, the residential property which is bought by re-investing the long-term capital gains must be situated in India.If you would like to buy a property outside India say in the US, you need to pay tax on the capital gain portion of the sale proceeds.
Categorize your capital gains i.e., Short term or Long term.
Calculate Short Term Capital Gains (STCG) / Long Term Capital Gains (LTCG).
If you have STCG, taxes are payable as per your income tax slab rate.
If you have LTCG, to save capital gains tax ;
You may invest the gains in another Residential property (or)
Buy Notified Bonds (or)
Temporarily invest in Capital Gains Account Schemes.
Else, you have to pay 20% on your Long Term Capital Gains.
Calculation of Capital Gains Tax on sale of property can be sometimes be a tricky one. It is advisable to exercise caution when claiming Capital Gains Tax Exemptions. When in doubt, kindly consult a tax expert or a Chartered Accountant.
(Image courtesy of Stuart Miles at FreeDigitalPhotos.net)
This post was last modified on September 28, 2023 6:32 pm
Sreekanth Reddy
Sreekanth is the Man behind ReLakhs.com. He is an Independent Certified Financial Planner (CFP), engaged in blogging & property consultancy for the last 14 years through his firm ReLakhs Financial Services . He is not associated with any Financial product / service provider. The main aim of his blog is to "help investors take informed financial decisions." "Please note that the views given in this Blog/Comments Section/Forum are clarifications meant for reference and guidance of the readers to explore further on the topics/queries raised and take informed decisions. The information provided, therefore, should not be viewed as financial, legal, accounting, tax or investment advice."
Can I invest CG to make another floor on my single existing house and save capital gains? Please let me know.
Thanks in advance.
Dear Srinivas ..I dont think so if any such provision exists.
I own a residential property in which plot was purchased more than one year back with home loan and construction was started in this FY 2016-17. I have used earlier LTCG of almost 15 lac (deposited in prescribed bank account) in construction of the house. I am yet to pay 10 lac more to the builder for construction. Now I have sold a plot in which i got LTCG of 50 lac. My queries are: If i can buy one more residential property and invest the entire proceeds to save tax. (at present i own only one residential property)
If i can pay 10 lac to the builder for construction cost as construction is still ongoing to reduce proportionate tax. and i m sure i cannt save tax by repaying some house loan.
Dear mukesh,
Suggest you to consult a CA and take advice.
Hi Srikanth,
I have brought an Apartment in 2007 for 17 lacs in my native.. Since then, paying the EMI from my salary.. Still i have outstanding of 14 lacs. In 2014, i have constructed a house and took the load of 20 lacs.. Struggling to pay these 2 EMIs.
I have almost paid 12 lacs towards the interest to the bank since 2007. Which is from my salary and had already paid the Income TAX for the same..
Now, I am planning to Sell the Apartment and pay the outstanding to the bank and remaining amount will pay towards my other loan.. Here are my questions..
1. Is it feasible?
2. Is it comes under Long term Captial Gain?
3. EMI amount is from my Salary account, had already paid the Income tax.. Should i need to pay the tax for this?
Dear Ram,
1 - Depends on the Sale price.
2 - Yes.
3 - Yes, taxes on sale of Apartment, on Long Term capital Gains.
My Grandfather has bought a Land in Delhi(80 sq yard) from DDA in April 1980 for Rs 1L.
Over the period of 35+ years, we have constructed/renovated the house, which costs
approx 40-50 Lakhs.
Recently in Feb 2017 we have sold this property for Rs 1Cr.
My Grandfather has two sons, we all are thinking to buy two house in Noida , each for one brother.
Now my question are:
1. Cost Inflation Index of 1981 & 2017 is 100 & 1125 respectively,how to add the construction/renovation cost
(do we need to show the proofs of that) while calculating LTCG.
2. As we get the money in Grandfather account, so to avoid the tax on LTCG, should the propery be bought in grandafther name only,
or it can be in his son/grandson name ?
3. If we buy the under constructed property in which possession commited by builder is after 2years, will we get the tax benifits of LTCG.
4. Can I & spouse take the home loan tax benifts while buying the house along with grandafther LTCG ?
Dear AB,
1 - There is no need to submit proofs/documentary evidence along with ITR, but you need to have them so that you can justify your stand, in case a tax notice is served.
2 - Your Grandfather has to buy the property.
3 - The new house has to be bought one year before (under-construction property) the transfer of the first house or within two years after the sale. (For an Under construction property or flat , the construction has to be completed within three years of the transfer of the first property.)
4 - I believe that we have discussed this in Gift related article.
Hi, A house property was self accquired by my elder brother. Land Purchased on:20.02.1979
Ground Floor Constructed on: 16.06.1982 First Floor Constructed on:12.10.1998(along with
renovation on ground floor) On the demise of my elder brother, my bhabhi and her 3 sons
inherited the property.(now 4 owners of the said property) These 4 owners jointly gifted
the said property by a registered gift deed without consideration to me and my wife.
The stamp duty was paid on the gift deed as per the circle rate valuation of Rs. 17 lacs.
1. What would be our capital gain if the property is sold for 1 cr.?
1. What would be our cost of acquisition? The cost of purchase of house by my brother in
20.02.1979 was around 1 lac.
There is another option proposed by the buyer of the property. He is willing to pay 75
lacs+ give us a flat valued at Rs.25 lacs.
3. How is the tax treatment of the flat given in exchange worked out?
I intend to purchase a house in my sons name from the sale proceeds.
If the property is purchased out of the capital gains in joint name of myself, my wife and
my son, will it be given tax benefit?
Regards,
Rajesh
Dear rajesh,
The capital gain (short term or long term) is dependent on the acquisition date on which your Bhabhi & sons, have inherited the property.
For exact CG calculations, kindly consult a Chartered Accountant.
As the property is gifted to you and your wife, if you re-invest the Gains in a new property, in the name of self+wife+son, the extent of Capital Gain exemption can be limited to your (self+wife) share in the new property.
I bought a flat for RS 20 Lakhs almost 10 years back and planning to sell for 49 Lakhs now , pending house loan of 12 Lakhs . Please let me know my capital gain tax. Do we have to give any proof for improvement expenses. Is the stamp paper and registration charges met during the purchase of the same is considered for deduction of tax. Please reply
Dear Anil,
Yes, stamp paper & interest payments etc., can be considered as Cost of acquisition.
For calculation of CG, suggest you to consult a Chartered Accountant.
Hi Sreekanth, thanks for this useful article.
I'm confused about one statement: "If you use the capital gain amount to clear loans then tax on LTCG cannot be saved. No exemptions can be claimed."
I'm currently staying in a flat which i purchased in Oct 2013 (Flat 1). I'm having home loan outstanding for this flat. Recently I purchased another flat (Flat 2) (Registration date: Dec 2016, Possession date: May 2017). I've availed home loan for second flat which has started. I've made full payment to builder and home loan EMI is also started for full amount.
Now, I'm planning to sell my first flat and shift to new flat in May 2017. For ease of explanation, I'm mentioning below numbers:
1. sale price of Flat 1 - 40 Lacs
2. Remaining Loan Amount for Flat 1 - 20 Lacs
3. Capital gain on Flat 1 sell - 9 Lacs (as per table)
4. Purchase cost of Flat 2 - 60 Lacs
5. Home Loan amount for flat 2 - 45 Lacs
I'm planning to use amount earned from sell of flat 1 after clearing home loan (20 Lacs), to reduce flat 2 home loan (i.e. from 45 Lacs to 25 Lacs).
Now as per statement, am I eligible from capital gain tax on 9 Lacs? Please confirm 'clear loan' means reducing loan amount or closing loan account.
Thank you.
Dear Manoj,
If one uses the Long term capital gains to clear home loan, no tax exemption is available.
You can use Rs 40 Lakh (Flat1 sale proceeds with LTCG) to buy a new Flat 2 and can save taxes on LTCG.
Dear Sir,
I have two properties which I want to sell. The first one is a house and the second one is a vacant plot. The taxable amount of the house after indexation and calculation of LTCG will be about Rs 6 lakhs and that of the vacant plot Rs 46 lakhs. If both the properties are sold within one financial year and the sale proceeds are not utilized for construction / purchase of another house which of the following options is/are permissible under the law.
1. 20 % IncomeTax is paid on the taxable amount of Rs 6 lakhs of first property and Rs 46 lakhs of second property is invested in NHAI/ REC bond so that the balance sale proceed of first property can be gifted to wife, children and sister.
2. The taxable amount of Rs 6 lakhs of first property and Rs 44 lakhs of second property is invested in NHAI/ REC bond and 20% Income tax is paid on balance sale proceed of Rs 2 lakhs of second property so that lesser amount of tax is paid.
3. Is it permissible to get both the properties evaluated by Authorised Valuer of IT Department and pay the IT on evaluated values of both the properties after indexation and calculation of LTCG.
Kindly try to help.
SC Patel
I HAVE SOLD MY ANCESTRAL PROPERTY, which came as my share measuring about 100 cents i.e. an acre. this was brought by my Grandfather in the year 1940 -1950. this is situated in Madduguude Village of Kundapur town in KARNATAKA. Since i AM STAYING INBENGALURU, i took the help of a local broker., who sold it as small plots.
the amt of sale proceeds'is FOR AN APARTMENT IN UDUPI. My doubt is whether i should pay TAX ON IT FOR THE fy.. 2016-17 The sale proceeds are in Capital gain A/C. Kindly Clarify. WITH REGARDS.
Dear CHANDRAKANTH .. Kindly consult a CA.
My father owns a property (purchased at 70L in 2003) against which he has a loan (3 Cr). we are creating a gift deed that transfers the loan liability and the property to me. I am planning to accept the same and sell it for 5 Cr, in part to clear the loan. Will my basis be 70L adjusted for inflation + 3Cr loan for computation of capital gains or just the 70L adjusted for inflation?
Dear Rahul,
As per few court judgments, an individual can avail dual benefits on home loan ie tax benefits as well as inflation adjusted cost of acquisition. Kindly consult a CA and take advice.
View Comments
Can I invest CG to make another floor on my single existing house and save capital gains? Please let me know.
Thanks in advance.
Dear Srinivas ..I dont think so if any such provision exists.
I own a residential property in which plot was purchased more than one year back with home loan and construction was started in this FY 2016-17. I have used earlier LTCG of almost 15 lac (deposited in prescribed bank account) in construction of the house. I am yet to pay 10 lac more to the builder for construction. Now I have sold a plot in which i got LTCG of 50 lac. My queries are: If i can buy one more residential property and invest the entire proceeds to save tax. (at present i own only one residential property)
If i can pay 10 lac to the builder for construction cost as construction is still ongoing to reduce proportionate tax. and i m sure i cannt save tax by repaying some house loan.
Dear mukesh,
Suggest you to consult a CA and take advice.
Hi Srikanth,
I have brought an Apartment in 2007 for 17 lacs in my native.. Since then, paying the EMI from my salary.. Still i have outstanding of 14 lacs. In 2014, i have constructed a house and took the load of 20 lacs.. Struggling to pay these 2 EMIs.
I have almost paid 12 lacs towards the interest to the bank since 2007. Which is from my salary and had already paid the Income TAX for the same..
Now, I am planning to Sell the Apartment and pay the outstanding to the bank and remaining amount will pay towards my other loan.. Here are my questions..
1. Is it feasible?
2. Is it comes under Long term Captial Gain?
3. EMI amount is from my Salary account, had already paid the Income tax.. Should i need to pay the tax for this?
Dear Ram,
1 - Depends on the Sale price.
2 - Yes.
3 - Yes, taxes on sale of Apartment, on Long Term capital Gains.
My Grandfather has bought a Land in Delhi(80 sq yard) from DDA in April 1980 for Rs 1L.
Over the period of 35+ years, we have constructed/renovated the house, which costs
approx 40-50 Lakhs.
Recently in Feb 2017 we have sold this property for Rs 1Cr.
My Grandfather has two sons, we all are thinking to buy two house in Noida , each for one brother.
Now my question are:
1. Cost Inflation Index of 1981 & 2017 is 100 & 1125 respectively,how to add the construction/renovation cost
(do we need to show the proofs of that) while calculating LTCG.
2. As we get the money in Grandfather account, so to avoid the tax on LTCG, should the propery be bought in grandafther name only,
or it can be in his son/grandson name ?
3. If we buy the under constructed property in which possession commited by builder is after 2years, will we get the tax benifits of LTCG.
4. Can I & spouse take the home loan tax benifts while buying the house along with grandafther LTCG ?
Dear AB,
1 - There is no need to submit proofs/documentary evidence along with ITR, but you need to have them so that you can justify your stand, in case a tax notice is served.
2 - Your Grandfather has to buy the property.
3 - The new house has to be bought one year before (under-construction property) the transfer of the first house or within two years after the sale. (For an Under construction property or flat , the construction has to be completed within three years of the transfer of the first property.)
4 - I believe that we have discussed this in Gift related article.
Hi, A house property was self accquired by my elder brother. Land Purchased on:20.02.1979
Ground Floor Constructed on: 16.06.1982 First Floor Constructed on:12.10.1998(along with
renovation on ground floor) On the demise of my elder brother, my bhabhi and her 3 sons
inherited the property.(now 4 owners of the said property) These 4 owners jointly gifted
the said property by a registered gift deed without consideration to me and my wife.
The stamp duty was paid on the gift deed as per the circle rate valuation of Rs. 17 lacs.
1. What would be our capital gain if the property is sold for 1 cr.?
1. What would be our cost of acquisition? The cost of purchase of house by my brother in
20.02.1979 was around 1 lac.
There is another option proposed by the buyer of the property. He is willing to pay 75
lacs+ give us a flat valued at Rs.25 lacs.
3. How is the tax treatment of the flat given in exchange worked out?
I intend to purchase a house in my sons name from the sale proceeds.
If the property is purchased out of the capital gains in joint name of myself, my wife and
my son, will it be given tax benefit?
Regards,
Rajesh
Dear rajesh,
The capital gain (short term or long term) is dependent on the acquisition date on which your Bhabhi & sons, have inherited the property.
For exact CG calculations, kindly consult a Chartered Accountant.
As the property is gifted to you and your wife, if you re-invest the Gains in a new property, in the name of self+wife+son, the extent of Capital Gain exemption can be limited to your (self+wife) share in the new property.
I bought a flat for RS 20 Lakhs almost 10 years back and planning to sell for 49 Lakhs now , pending house loan of 12 Lakhs . Please let me know my capital gain tax. Do we have to give any proof for improvement expenses. Is the stamp paper and registration charges met during the purchase of the same is considered for deduction of tax. Please reply
Dear Anil,
Yes, stamp paper & interest payments etc., can be considered as Cost of acquisition.
For calculation of CG, suggest you to consult a Chartered Accountant.
Hi Sreekanth, thanks for this useful article.
I'm confused about one statement: "If you use the capital gain amount to clear loans then tax on LTCG cannot be saved. No exemptions can be claimed."
I'm currently staying in a flat which i purchased in Oct 2013 (Flat 1). I'm having home loan outstanding for this flat. Recently I purchased another flat (Flat 2) (Registration date: Dec 2016, Possession date: May 2017). I've availed home loan for second flat which has started. I've made full payment to builder and home loan EMI is also started for full amount.
Now, I'm planning to sell my first flat and shift to new flat in May 2017. For ease of explanation, I'm mentioning below numbers:
1. sale price of Flat 1 - 40 Lacs
2. Remaining Loan Amount for Flat 1 - 20 Lacs
3. Capital gain on Flat 1 sell - 9 Lacs (as per table)
4. Purchase cost of Flat 2 - 60 Lacs
5. Home Loan amount for flat 2 - 45 Lacs
I'm planning to use amount earned from sell of flat 1 after clearing home loan (20 Lacs), to reduce flat 2 home loan (i.e. from 45 Lacs to 25 Lacs).
Now as per statement, am I eligible from capital gain tax on 9 Lacs? Please confirm 'clear loan' means reducing loan amount or closing loan account.
Thank you.
Dear Manoj,
If one uses the Long term capital gains to clear home loan, no tax exemption is available.
You can use Rs 40 Lakh (Flat1 sale proceeds with LTCG) to buy a new Flat 2 and can save taxes on LTCG.
Dear Sir,
I have two properties which I want to sell. The first one is a house and the second one is a vacant plot. The taxable amount of the house after indexation and calculation of LTCG will be about Rs 6 lakhs and that of the vacant plot Rs 46 lakhs. If both the properties are sold within one financial year and the sale proceeds are not utilized for construction / purchase of another house which of the following options is/are permissible under the law.
1. 20 % IncomeTax is paid on the taxable amount of Rs 6 lakhs of first property and Rs 46 lakhs of second property is invested in NHAI/ REC bond so that the balance sale proceed of first property can be gifted to wife, children and sister.
2. The taxable amount of Rs 6 lakhs of first property and Rs 44 lakhs of second property is invested in NHAI/ REC bond and 20% Income tax is paid on balance sale proceed of Rs 2 lakhs of second property so that lesser amount of tax is paid.
3. Is it permissible to get both the properties evaluated by Authorised Valuer of IT Department and pay the IT on evaluated values of both the properties after indexation and calculation of LTCG.
Kindly try to help.
SC Patel
Dear Mr Patel,
1 - Permissible.
Kindly read: Gifts & tax implications.
2 - Permissible.
3 - Yes.
I HAVE SOLD MY ANCESTRAL PROPERTY, which came as my share measuring about 100 cents i.e. an acre. this was brought by my Grandfather in the year 1940 -1950. this is situated in Madduguude Village of Kundapur town in KARNATAKA. Since i AM STAYING INBENGALURU, i took the help of a local broker., who sold it as small plots.
the amt of sale proceeds'is FOR AN APARTMENT IN UDUPI. My doubt is whether i should pay TAX ON IT FOR THE fy.. 2016-17 The sale proceeds are in Capital gain A/C. Kindly Clarify. WITH REGARDS.
Dear CHANDRAKANTH .. Kindly consult a CA.
My father owns a property (purchased at 70L in 2003) against which he has a loan (3 Cr). we are creating a gift deed that transfers the loan liability and the property to me. I am planning to accept the same and sell it for 5 Cr, in part to clear the loan. Will my basis be 70L adjusted for inflation + 3Cr loan for computation of capital gains or just the 70L adjusted for inflation?
Dear Rahul,
As per few court judgments, an individual can avail dual benefits on home loan ie tax benefits as well as inflation adjusted cost of acquisition. Kindly consult a CA and take advice.