Long term capital gain from sale of flat

When the cost of flat was 14 lakh why was registration done for 17 lakh?

Does this 17 lakh include the 1 lakh paid for registration charge?

Have you claimed deduction of this 1 lakh registration charge earlier u/s 80C?

Do you have bills or receipts of this 50K spent on development.

Currently I am only assuming this 17 lakh as cost and 22 lakh as sale price and I am assuming that circle rate of flat is also 22 lakh now.

So the capital gain would be 22 lakh less 1980000 i.e. 220000 and tax on same would be 45,760.

However still the cost inflation index for 2019-20 are not available so the capital gain would not be more than this.

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

Thank you

So you must have paid the increased price i.e. 17 lakh or you have paid only 14 lakh and registration was done for 17 lakh?

If you have the allotment letter or any such document which proves that you were alloted property in 2011 then the indexation will be done from 2011 and in that case you will have a capital loss whether the cost is 14 lakh or 17 lakh.

But if you don't have any allotment letter then you need to index it from 2015 when you got registration.

If no receipt of development charges then no cost of such expense from capital gain.

No benefit for repaying loan of 6 lakh from this gain amount.

Thank you

Hi,

The date of letter of allotment will be considered as date of purchase. When did you receive letter of allotment? 

If you have received letter of allotment in 2011, cost will be indexed from 2011. 

with respect to 50k, it depends upon the nature of development. If the development is routine repairs, you will not get any benefit. However, if it is substantial improvement, you will get the benefit.

Loan has nothing to do with capital gain.

Hi,

- As the possession of the flat is in the year 2015 therefore indexation will be done from 2015-16. Indexation COA would be Rs.18.74 lacs and LTCG would be Rs.3.26 lacs. For development work, payments made to labour will be allowed as Cost but for the material you need invoice to claim it. If any brokerage is paid at the time of sale then the same will be deducted.

Thanks

Dear Sanjeev,

Hope you are doing well !!

The starting date for the holding period also continues to be a matter of litigation because of different rulings from high courts and Income Tax (I-T) tribunals. The most common view, however, is that the date of allotment should be considered for determining the holding period rather than the date of possession.

For capital gain calculation, we need the date of allotment. Indexation should be done from allotment year.

Amount spent on development will be included in cost of acquisition provided it was not spent on routine work and you have sufficient proof.

Further,Home loan and Capital Gains Exemption are two separate things. You can claim the Capital gain exemption only if you use the money from the sale of the property to buy another house. The purchase of new house has to be done one year before the sale of the house or  2 years after the sale of the house.  The property should be bought in the name of the seller.  Income tax department is not concerned if you used the sale money for repaying the home loan or not.

Hello,

If you have the allotment letter from the builder then the holding period will start from 2011, otherwise, it will start from 2015 date of registration.

If we consider the date of registration as the date of purchase i.e. 2015, then the LTCG will be around 45,000/-

And if we consider the date of allotment as the date of purchase then there would be Long Term Capital Loss.

Development expenses being capital nature could be allowed if you have proof of the same.

Repayment of the loan of Rs. 6 Lakhs will not have any effect in the capital gain calculation.

I hope this answer satisfies your requirement.

Regards,

CA Hunny Badlani