Resell of property in india

Dear Sir,

Hope you are doing well !!

For under construction property - the holding period shall be counted from the date of allotment letter for capital gain calculation purpose.

Have you got the allotment letter in 2011?

Dear Sir,

If builder has given you allottment letter i.e. letter to allot you unit in 2018 than short temr capital gain will be applicable and if its was provided before 2016 than long term capital gain shall be applicable. Its letter mentioning that this particular unit is allotted to you as rightful owner of the property.

In case of allottment letter received in 2018 Capital gain shall be at your normal slab rate on the entire markup amount of Rs. 30 Lacs.

In case allottment letter is of 2011 or 2016 depends upon year the capital gain will be different since inflation effect will be provided on purchase cost of the property and accordingly gain from the property will reduce.

If you are booking an under-construction property, you are required to receive an allotment letter from the builder. This letter includes all the details regarding the flat, the payment options and any extra charges that you may have to pay in case of maintenance or additional facilities. It also includes the construction schedule, house plans, delivery date and builder’s liability in case of late completion or problems after possession.

If booking is done in 2011 then you will be liable for LTCG tax.

Please share the following details for exact calculation:

1. Cost of property

2. Sales value.

As you are saying that the sale value is more than registration value but you can claim the benefit of indexation so that the capital gain amount will get reduced.

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.

LTCG tax is chargeable @20% (plus applicable cess & surcharge) on long term capital gain amount

Hi,

- Assuming you got possession in 2016 then you will be deemed as owner w.e.f  2016 and not from 2011 due to which it will be treated as short term capital gain and tax would be Rs.7,41,000.

- To save tax, you need to invest either in HP or bonds.

Thanks

Hi Prasad,

Yes , capital gain tax will apply irrespective of the fact that whether the property got ready in 2016 or 2018.

The calculation of capital gain tax will depene upon the date of allotment letter and the date of payment made by you to the builder.

Allotment letter is a document through which buyer allots you a specific property. Say, I please be giving you the flat no . B - 1101 sitauted on 11th floor.

You will obviously have to pay capital gain tax.

Now the only thing we need to decide is whether it will be long term capital gain tax or short term capital gain tax and that will depend on when did you get the possession from the builder. Since you are saying you got registration in 2018, per se it seems that it is short term capital gain and you will have to pay short term capital gain tax which will be around 712000.

However if you have any proof that you got the possession of the flat from the builder in 2016 or in 2011 and due to some circumstances only the registration was left then you will have to pay long term capital gain tax and which will save around 2-3 lakhs of tax.

If you need or want to understand anything further you can opt for phone consultation.

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

Thank you

You are earning an income and hence taxed would definitely apply.  From financial year 2017-18, when an immovable property is held for more than 24 months, it is treated as Long term capital asset and gains from sale will be long term capital gains.

Under normal scenario, dates are counted from the registration deed.  But as your case is different, it would be prudent to consider the dates when you received allotment letter ie when you got the right to occupy the asset ie in 2016.

There are mechanics given under Indian tax for calculating long term capital gains.

The capital gains would be sale price less the indexed cost of acquisition.  The cost would be the actual cost as incurred by you to buy that property. Indexation is a cost inflation index which is notified by the Govt.  . It is done to adjust for inflation over the years. This increases one’s cost base and lowers the capital gains.

The gains so arrived at is taxable at 20%.  There are certain ways to claim exemption on such long term capital gains also

Hi

Yes capital gain tax applies here.

Indexed Purchase price will be calculated from 2011 on wards as per the payment done.

Deduct it from sale price ,will give you Capital gain,tax thereon will be @20%.

Hope it helps