• Adjusting Loss on sale of residential property for income tax returns

Sir,

After taking possession of an apartment at Gurgaon (15/9/18) in Gurgaon more than 3 years ago, the said property is sold at loss (23/8/22), taking purchase value and sale value shown in registry. Details are as under-
1 Purchase value in registry-1,13,32800
2 Total sale value in registry-1,06,50000
3 pl note that 1st registry was delayed due to covid etc done on 17/11/21 
4 This purchase value does not include other charges like-club charges Rs 2,36,100 and IFMS 2,36,100
5 The stamp duty Rs 7,93,400/ registeration fee if Rs 50000/ is also over and above the value shown.

Question-
A. 3 year holding the flat from.possession would qualify for LTCG?
B can other charges , which are not included in registry value when I purchased can be added to reach at total purchase cost?
C Will stamp duty alo be added to reach Total purchase cost?
D. Apart from losses in registry amount at purchase and sale, indexation would also apply? How much amount for indexation for the period Sept 2018 till Aug 2022?
E The interst paid on home.laon, which was over the 2 lakh limit and was claimed in ITRs in u/s 24 I think,, can it also be added to arrive at losses ?
Asked 1 year ago in Property Tax

A. what evidences you have to sustain that possession is taken

b yes other charges can be added 

c yes stamp duty can be added if no deduction claimed under section 80C

d depend on answer to A

e no as you already claimed deduction for the same 

Anuj Agarwal
CA, Aligarh
61 Answers

4.4 on 5.0

A. 2 years from the date asset is held by the person. In your case period for LTCG would be calculated from the date of possession of the apartment.

B. Yes all expenses or charges which are incidental for transfer of the property should be included in the cost of acquisition of the property.

C. Yes stamp duty paid and registration charges will be included in the cost

D & E. Loss/Gain would be be calculated after deducting cost of indexation & cost of improvement (if any) from net sale consideration. Net sale consideration means total sale consideration less expenses incurred wholly and exclusively for transfer of the property (i.e. brokerage, conveyance expenses, vetting expenses, litigation expenses). 

Indexed cost of acquisition - Indexation would apply on (Purchase cost as per registry + Incidental expenses + Stamp duty paid + registration expenses + interest on housing loan for which deduction not availed).

 

For detailed discussion, you may opt for phone consultation.

Vivek Kumar Arora
CA, Delhi
4885 Answers
1069 Consultations

5.0 on 5.0

If you have the proof that possession was taken over before 3 year and risk and rewards were transferred then you can claim it as a LTCG.

All expenses incurred to purchase the property can be added to the cost of the property.

Yes if you have not claimed stamp duty under 80C you can add it to the cost of property.

You can check the indexation here: https://www.taxontips.com/cost-inflation-index-cii-for-fy-2022-23-to-calculate-capital-gain-announced-by-income-tax-department/

No I don't think interest on home loan should be added.

 

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

Thank you.

Naman Maloo
CA, Jaipur
4288 Answers
98 Consultations

5.0 on 5.0

 

A. It would be LTCG if it is held for more than 2 years. It would be calculated from the date of possession. 

B. You can add all expenses or charges 

C. You can include stamp duty paid and registration charges provided you have not claimed stamp duty deduction u/s 80C

D Yes indexation would apply to all costs plus the charges and the stamp duty

E) You cannot claim the deduction of interest expense if already claimed u/s 24. 

Prerna Peshori
CA, Pune
197 Answers
11 Consultations

5.0 on 5.0

Hi

as per section 2, transfer can be considered when possession takes place and accordingly, you may take the date of possession as date of acquisition. However, please note that the holding period for LTCG in case of immovable property is not 3 years but 2 years.

With respect to other charges such as club charges, IFMS charges, there is no official description of cost of acquisition. But may be they are not includible since they are recurring charges and in my opinion any one time non refundable charge incidental to the transfer of property may be included in cost of acquisition

Stamp duty, brokerage, legal fee, registration charges can be included.

For indexation, you may refer the Cost inflation index.

Any interest for which deduction was not claimed u/s 24 can be included in cost of acquisition.

 

Kindly refer back for any clarification. Thanks

Siddharthh Jain
CA, Gurgaon
65 Answers
1 Consultation

5.0 on 5.0

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