Rashmi (CA-Final-articled assisstant) (48 Points)
30 July 2010One of our client had bought a Flat in the year 2005-06 the construction is still not complete and for which he had taken a loan and had being paying interest on the same.
Now in feb 2010 he has transfered the right in the property will that pre-EMI interest what he has paid be allowed as part of indexed cost or what is the treatment for the same??
will the maintenance charges paid for a flat be allowed as deduction from the sale value???
Member
(Management)
(325 Points)
Replied 30 July 2010
Only cost of improvement is allowable as a deduction with a weightage for inflation by way of indexation. What is the improvement he has made to the property by paying interest and principal on the property? Same goes for maintainance charges.
In short, any amount spent to increase the physical worth of the property (read civil works) will qualify for indexation as cost of improvement. Otherwise, the expenses incurred must be incidental to transfer of the property like brokerage, registration and stamp duty charge etc. All else are ruled out.
Rashmi
(CA-Final-articled assisstant)
(48 Points)
Replied 30 July 2010
wil the loan availed for the purpose of purchase be considered as improvement ?? i dont think so!!
Member
(Management)
(325 Points)
Replied 30 July 2010
You are right, it doesn't. Any self created charge is not allowable as an expense from LTCG.
LIVE Form 10 B and Form 10BB: Handle Tax Audit Reports of Charitable Organizations(with recording)
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