If you actually paid those charges , u can definitely include it.
Inclusions while computing capital gains during sale and purchase of residential property.
I have sold residential property (A) this year due to which has resulted in capital gains. Now i plan to reinvest in a new residential property (B) very soon. 1.. Can I include Stamp Duty, Registration, Brokerage charges borne during purchase of property A in computing of Capital Gains during sale. ? 2. Can I include Stamp Duty, Registration, Brokerage charges in cost of buying the new property B so that i can utilize more of capital gains received from sale of property A? 3. Are there any other components that i can include other than Stamp Duty, Registration, Brokerage ?
Asked 5 years ago in Capital Gains Tax
Dear Sir,
-Stamp duty and registration cost are treated as part of cost of acquisition and will be indexed for the calculation of long term capital gain.However, if 80C deduction was claimed in the year of purchase in respect of such expenses, then double deduction shall not be provided and these expenses shall not form part of COA.
-Expenditure incurred wholly and exclusively for the purpose of transfer is brokerage, commission and advertisement expenses.
-Cost of improvements are also part of cost of acquisition.
1. Yes you can
2. It will include only property cost and stamp duty cost cant cover borkerage fees and registration fees.
3. No, unless you have alteration in property cost of alteration of property can also be cosnidered
Thanks for all your responses. Since the responses differ in content, i am summarizing what i understand - 1) During Sale of property A : indexation can be done on original cost (Agreement value + stamp duty + registration + brokerage) to compute capital gains from sale. 2) During reinvestment in new property B: only new Agreement value + Stamp duty can be inclusions in the purchase / acquisition price to offset the capital gains from earlier sale of property A. 3) Can someone reconfirm that we cannot include registration or brokerage of new property B in the total purchase price? I may be asking what may already be answered but I thought of clarifying again as i get different advice from different people. thanks in advance.
Asked 5 years ago
Yes same as answered
Hi
1. Yes, provided no deductions have been claimed in relation to such expenses in the year of purchase.
2. Yes.
3. Any expenses incurred directly in relation to acquisition of the property shall be allowed.
Hi,
If brokerage is paid through banking channels and you are having receipt for the same then it can be included. Brokerage paid in cash will be disallowed. Registration charges will be included without any doubt as they are clearly mentioned on the sale deed. Inclusion of brokerage will be subject to litigation.
1. Computing capital gain: As a buyer u paid registration & stamp duty. So include in COA.
2. During Reinvestment: You would have paid stamp duty & registration. Otherwise how could you be the owner?. So u can also include those charges as part of COA.
3. According to me u can include those cost in reinvestment. Since it is part of cost of residential house.
Hi,
1. Yes.
2. Yes.
3. You can include both the expenses provided you have sufficient proof.
Hello,
1. Yes, you can include all three expenses borne by you.
2. Stamp Duty and Registration Charges would be allowed on reinvestment.
3. Other than above, any cost of improvement in property A would also be allowed as deduction.
I hope this answer satisfies your requirement.
Regards,
CA Hunny Badlani
While calculating purchase price of property sold you can include stamp duty and other charges if same have not been claimed by you as deduction under section 80C earlier.
With regard to sale price you can deduct brokerage from sale value as expense as stamp duty is generally borne by purchaser.
With regard to new property purchased I would recommend to include only the purchase price as exemption and claim stamp duty as deduction u/s 80C.
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Thank you.
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