Loss from Sale of property - Tax implication on Personal income tax

Hi,

- Whatever you and your wife claimed as exemption in the form of interest and principal component on housing loan is admissible. In the future years, capitalize the amount of interest and claim it as cost while calculating capital gain.

- Add interest for which no benefit claimed by you and your wife in the cost of 57.30 lacs and indexed it to arrive at the capital loss. Maintenance charges will not be allowed as cost.

- Loss will be set-off with long term capital gain only in the future and will be carried forward for next 8 A.Y.

Thanks

I don't think you will get deduction of stamp duty as cost of property because you might have claimed it as deduction under section 80C when you might have purchased this property.

Also you won't get deduction of maintenance charges. Parking cost would also be allowed as deduction if you are selling that and if it's included in that 50 lakh sale price.

The benefit of deduction claimed till now is admissible and no need to reverse it now.

The loss calculated on such sale would be long term capital gain and could be set off against any other long term or short term capital gain and could be carried forward for 8 years.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Hi,

Hope you are doing well !!

1. No tax implication on tax exemptions that you and your wife have already claimed.

2. Interest paid will be treated as part of cost of acquisition. Maintenance charges will not be treated as cost so you won't get deduction on the same.

3.Long-term capital loss will only be adjusted towards long-term capital gains. It can be carry forward up to next 8 assessment years from the assessment year in which the loss was incurred.

Interestingly, a short-term capital loss can be set off against long-term capital gain or short-term capital gain.

This asset would be long term capital asset as it was owned by you for more than 3 years. Considering the values you are giving it would be a loss on sale ie capital loss in your hands. The working would be Selling price less the indexed cost of acquisition (all expenses incurred for purchase to be considerd) less the expenses incurred for transfer.

IN case you have claim any capital gain exemption when you purchased this house there could be a lock in period of 3 or 5 years (depending under which provision u claimed exemption). The gains so considered will be taxable in year of sale. In case you are only referring to benefit claimed under sec 80C deduction, as you are transferring the house before 5 years, the deduction so claimed should be now taxable.

Whatever loss you incur can be carried forward or set of against future long term capital gains.

REverting you in layman terms, since you did not understand the replies when given :

1 IF you have claimed 80C deduction, as 5 years have not passed - the deduction so claimed is income in your hands.

2.Loss would be selling price less the cost of the house less the cost incurred to sell the house

3. You will get carry forward of loss to be set off against future income, there is no exemption. This is akin to benefit only.

YOu can call in case difficult to understand technical language

Hi,

Below are the responses to your queries :

1. As the property is held for more than 3 years the deductions and exemptions shall not be reversed.

2.The loss shall be the differential between Indexed cost of Acquisition and Sale Price.

Indexed cost of Acquisition shall be agreement value and parking amount multiplied by Cost inflation index.

The loss on a/c of interest cannot be claimed here as already the same would have been claimed by you in earlier Income Tax Returns.

3. The loss can be c/f to subsequent A.Y.'s. and shall be set off only against Long Term Capital Gains.

Hope this resolves your queries.

We are also based in Mumbai, you can reach us in case of any more queries.

Thanks & Regards,

Siddhant Shah

1. No tax implication.

2.To calculate the long-term capital gains tax payable, the following formula is to be used:

Long-term capital gain = full value of consideration received or accruing – (indexed cost of acquisition + indexed cost of improvement + cost of transfer), where:

Indexed cost of acquisition = cost of acquisition x cost inflation index of the year of transfer/cost inflation index of the year of acquisition.

Indexed cost of improvement = cost of improvement x cost inflation index of the year of transfer/cost inflation index of the year of improvement.

3. Any LTCL incurred by you upon the sale of such a capital asset can be utilised to set off against LTCG arising from any asset in the current financial year. You can also carry forward any unutilised LTCL and set off this loss against capital gains earned in subsequent years (up to eight subsequent financial years).

Hi,

Please find below response to your queries:

1. No tax implication as the property is held for more than 3 years.

2. Loss would be selling price less the indexed cost of acquiring the house less the cost incurred to sell the house.

3. Capital Loss can be set-off with long term capital gains only in the future and can be carried forward for next 8 A.Y.

Regards,

Nikhil.