Capital Gains Tax on Sale Deed value

This query is : Resolved

Nagabhushan (Querist)
Follow

05 January 2009 Hi,
I want to sell a property (Residential Flat) for 26 laks which I bought it for 12 laks but registered sale deed value is for 5 laks only. So what amount should I consider for capital gains as property bought price 5 laks according to SALE DEED or 12 laks original one and mentioned in Agreement of Sale document

An I want to buy another flat with that amount. So at what value should I register that new one ? entire 26 laks or lesser one to reduce registration charges...according to the market ? Please help me. thanks in advance.
nagabhushan.

K V Subba Rao

K V Subba Rao (Expert)
Follow

05 January 2009 Amount indicated in the Sale Deed as Sale Consideration has to be considered for taxation purpose

Nagabhushan

Nagabhushan (Querist)
Follow

05 January 2009 The actual problem is, My father and my mother took a flat in 2004 for 12 laks but registration value in sale deed is around 5 laks only. and Me an my mother took one more flat for 30 laks with a home loan but registration value in sale deed is around 7 laks. Now they want to sell it for 26 laks and repay my home loan with that amount.
1.So what needs to be done to avoid capital gains tax ?
2.Should I re register my flat where my mothers name is included on my fathers name ?
3.And if so how much amount should I mention in sale deed at the time of registration?
4.And how much they should show in the sale deed of theie selling flat to the other party to avoid capital gains.
5.What are the necessary documents while filing the capital gains tax?

6.If I show all the original amounts, I will be at loss as even though I bought my flat for 30 laks and my parents want to repay my home loan, registered value in sale deed was around 7 laks and they are paying 26 laks so I will attract capital gains tax ? How to avoid this ? Can t I show Agreement of sale document value as the proof..where entire 30 laks was mentioned correctly?

Please guide me so that my parents and myself both can avoid capital gains tax. Which should be the case but because of the lesser registration values we should not suffer. Thanks in advace.

Upgrade to CAclubindia Pro. Subscribe Now!

K V Subba Rao

K V Subba Rao (Expert)
Follow

05 January 2009 Much thought doesn't appear to have gone into taxation aspect at the time of initial purchase.

The less we speak the better about yawning difference between registration value and actual cost

Better get in touch with an Income-Tax Consultant locally.

One should remember that Registration Expenses is 9 % wheres Capital Gains Tax is 20%

One can't attempt to save in both Registration Expenses and Capital Gains. It is like eating and also having cake, the old proverb we all learnt years ago

In future, before entering into any big financial transactions, consult any local practising CA. It is like consulting a Doctor when one becomes sick

Nagabhushan

Nagabhushan (Querist)
Follow

06 January 2009 Hi Sir,

As we are new to these flats purchasing, what ever builder does we accept it. Any way its our fault, I do agree. But I have one more doubt. We have Agreement for construction given by builder for around 20 laks. Can we show this as proof for improvement on the sale deed value so that capital gains can be reduced. what I mean is total finished flat costs me for saledeed value(unfinished registration) plus this construction agreement value?Please clarify. Thanks in advance.

K V Subba Rao

K V Subba Rao (Expert)
Follow

06 January 2009 It is possible.

In most of the cases, Flats are registered at initial stages, that is, before completing construction. This practice has been in vogue for several decades

Seperate Agreements are entered into for construction purpose. These amounts, if routed thro banking channel as a matter of safety, can well be officially and boldly considered as forming part of acquisition cost for computing Capital Gains in due course.

Nagabhushan

Nagabhushan (Querist)
Follow

07 January 2009 Thank you very much for your patience replies. I still hold a query. In my case, my father and mother holding a property selling it and buying another one which in in the names of myself and again my mother. So re registering that from myself and my mother to them (here agian my mother will come into picture) will work for them to avoid capital gains ??? in both case my mother is a part..so is that possible???

Nagabhushan

Nagabhushan (Querist)
Follow

07 January 2009 Thank you very much for your patient replies. I still hold a query. In my case, my father and mother holding a property selling it and buying another one which is in the names of myself and again my mother. So re registering that from myself and my mother to them (here agian my mother will come into picture) will work for them to avoid capital gains ??? in both case my mother is a part..so is that possible???

Upgrade to CAclubindia Pro. Subscribe Now!

Nagabhushan

Nagabhushan (Querist)
Follow

21 January 2009 Can anyone answer my above query please?

Nagabhushan

Nagabhushan (Querist)
Follow

21 January 2009 Can anyone answer my above query please?