Capital gains

Tax queries 640 views 2 replies

Ramakrishnaraju

supervisor

211 Points Joined December 2009

I purchased a flat for Rs.8.5 lakhs with Registration Rs.1.25 lakhs approximately during 2003. Apart from the above, i spent around Rs.3.00 lakhs for interior decoration(i believe it is a capital expenditure). Based on the market value, i took loan over the years by balance Transfer facility and now the loan quantum is Rs.22 lakhs(Nov.2009) I am getting an offer for Rs.26.5 lakhs. Now Wht will be my capital gains ? whether 2% preclosure by the bank can be added to the capital.

Replies (2)

Chintan Shah

534 Points Joined October 2009

Dear friend RK,

Bank charges for preclosure of loan are not expenses incurred wholly and exclusively for the purpose of transfer of the capital asset being house property in your case. Hence same cannot be added to cost of acquisition. Hence the computation of capital gains would be as under: (It is assumed that the interior decoration is compeleted in the 2003-04 itself:)

			Rs, in lacs
Registration charges			1.3
Purchase price			8.5
Cost of acquisition			9.8
Cost of improvement			3.0
Indexed cost of Acquisition			4.1
Indexed cost of Acquisition			13.3
Total cost deductible			17.4
Sale consideration			26.5
Capital gains			9.1

Regards

Chintan

srinivasan

engineer

21 Points Joined July 2012

i jointly own one flat with 5 others in chennai.we wish to enter into joint development agreement with a builder who will demolish and reconstruct 12 flats in place of 6 and give 6 to us without any cost to us and sell the rest to cover his cost. In addition, as our property is in prime area, builder has to pay us compensation of about 15 laks to each 6 of us, for getting 50% of our land. how is the capital gains calculated in this case.

1. will it be only on 15 lak compensation we will receive or including the cost of free flat we get.

2. will the cost of aquisition be 50% of the cost we originally paid to buy the property in 1979 as we are selling only 50% of our land to builder and retaining the rest.

3. Since builder will only give us bare flat we need to do interior decoration like wardrobe kitchen etc. to make it livable. Can we claim this as cost of improvement of our property and set it off against capital gains. can i open capital gains account and deposit the sum required for this purpose.