• Capital gain tax on redeveloped flat sold within 2 years of possession

Hi,
We had a MHADA apartment which we purchased in year 1994. It has gone under a development in 2011 and we got possession of new flat in FEB 2018. Area of old apartment was 160 sq.ft. and new flat is 485 sq.ft. We have sold this flat in July 2019 i.e. within 2 years of possession. 
Are we liable for LTCG or STCG? What will be the purchase/ base value & sales value for calculating capital gain?
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Asked 11 days ago in Capital Gains Tax from Mumbai, Maharashtra

Yes you need to pay stcg on such gain.

Purchase value would be the price at which you would have signed the deed in 2018.

Sale value would be the value at which you have sold the property.

 

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Thank you

Naman Maloo
CA, Jaipur
2847 Answers
25 Consultations

5.0 on 5.0

Hello,

 

Since you have sold the re-developed property within 2 years from the date the redevelopment was completed, the resultant gains would be taxable as short-term capital gains (STCG)

Sale value would be actual sale consideration received. Cost of Acquisition would be the sales consideration offered to tax at the time of receiving completion certificate from the competent authorities for the redeveloped property.

I hope that this answer satisfies your requirements.

 

Regards,

CA Hunny Badlani

Badlani & Associates

Hunny Badlani
CA, Madhya Pradesh
1755 Answers
5 Consultations

5.0 on 5.0

No, you cannot consider cost of acquisition higher than the value in the sale deed, since you must have mentioned the same as sales value at the time of LTCG on redevelopment property in 2018.

Hunny Badlani
CA, Madhya Pradesh
1755 Answers
5 Consultations

5.0 on 5.0

If such is the case why did you not show such amount as income from other sources at that time.

You can't take such benefit.

Naman Maloo
CA, Jaipur
2847 Answers
25 Consultations

5.0 on 5.0

Hi,

 

It would be STCG.

 

Actual sales consideration- Purchase value at the time of possession. 

Payal Chhajed
CA, Mumbai
3904 Answers
54 Consultations

5.0 on 5.0

No, you can't consider FMV. 

Payal Chhajed
CA, Mumbai
3904 Answers
54 Consultations

5.0 on 5.0

- If the registration of the apartment was done in 1994 then it would be LTCG otherwise STCG. Obtain valuation report as on 01.04.2001 and index it till the date of sale i.e. 2018.

Vivek Kumar Arora
CA, Delhi
3323 Answers
183 Consultations

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