Capital gain tax

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

16 March 2014 I purchased an under construction apartment in may2008 from builder under housing loan (through article of agreement document for which full payment was made to builder in may 2008 itself) and received possession via a sale deed in jan 2013. I needed to know

1. Whether I can avail of long term capital gain tax or short term tax?
2. If short term tax, can I deduct the interest paid on the loan for these years - as cost ofacquisition - considering that thesehave been over and above expenses paid to the loan bank. Or is it only the cost of purchase +stsmp duty+registration that is to be deducted from the sale amount for cakculation if capital gain tax?
3. In case of short termcapital gain, if I reinvest the profits on sale in the same financial year, can I save on this tax?

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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17 March 2014 The day you have made the payment tgo the builder it is good for availing the deductions u/s 54 or 54F but if after possession you are selling within 3 years then it is short term capital gains and on that you have to pay tax @ 30.9% which is regular tax for business income. There is no such benefit for short term capital gain as is available on shares.

Querist : Anonymous

Querist : Anonymous (Querist)

17 March 2014 1. Would this hold true even if full payment was made to the builder in may 2008 against artickes of agreement itself but sale deed was executed in may 2008?

2. Also, how is capital gain tax calculated. Whatcan be deducted as expenses - cost of purchasing the apartment + stamp duty + registration cost? Can thecost of interest paid on home loan also be added here while calculating capital gain snce this is an additional cost incurred?

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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18 March 2014 well the possession is the relevant issue here. you got the possession in 2013. so the gains shall be nature of short term.

all the cost paid including interest can be added to the cost.

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Querist : Anonymous

Querist : Anonymous (Querist)

18 March 2014 Thanks Nikhil, I amglad that the interest paid on the home loan since 2008 is considered and can be deducted from the capital gains considering that the interest paid has been a considerable amount.