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Capital gain from sale of a gift property

babugr (dgm) (509 Points)

31 January 2016

My wife got a piece of land property as gift from her mother in 2008, the value mentioned in the deed was Rs.2.40lacs, the land was acquired originally in 1980 at a cost of Rs.1700 only, now that land falls very close to AP capital zone. As the land may be acquired by Govt for road and infra development we would like to sell it. In order to calculate the capital gain can I take Rs.2,40,000 as the purchase price ? Kindly advise

GR Babu

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4 Replies

Member (Management) (325 Points)
Replied 02 February 2016

There is something about cost to previous owner. So probably the registration value as on 1.4.1981 will be the correct cost of acquisition.

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Shivani Mittal (Practice) (425 Points)
Replied 02 February 2016

Hi,

As per sec 55(2), cost of acquisition will be higher of Rs 2.4 lakhs i.e actual cost or fair market value as on 1.04.1981. Holding period for your wife will be since 1980. Capital gains will be computed accordingly using cost inflation index.

Regards

CA Shivani Mittal

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babugr (dgm) (509 Points)
Replied 02 February 2016

Thanks for your response, the value 2.4 lacs indicated as Market Value by Govt. registration website. I do not know whether it is fair or not, I will any how consider 1.4.81 as advised for arriving at indexed price and calculate capital gain

GR Babu

Shivani Mittal (Practice) (425 Points)
Replied 02 February 2016

You are welcome.

Rs 2.4 lakhs is the market value as on date of pusrchase. Check the market value as on 1.4.1981. Hence, the higher of the two will be taken as the cost of acquisition.