Reinvesting money received through property sale

The Tax payable is to be computed by using the indexation factor.

If the value of house construction is Rs. 100000 in 2004 (Index - 113 ) it will be Rs. 240707 in 2017-18.(Index - 272). We need to arrive at the cost of construction/acquisition as per indexation, then if any improvements during these much years need to be calculated. I give you simple calculation. (Ex - Cost of Construction 10 Lakh & Cost of Improvement - 1 lakh in 2010 (index for [deleted]))

Sale consideration - Rs. 35.50

Less : Cost of Construction Rs. 24.07

Less : Cost of Improvement Rs. 1.62

Capital Gain Rs. 9.81

This 9.81 is taxable @ 20%. We can claim exemptions u/s 54 and so on. Also if the valuation comes to 47.16 and we need to consider sec 50C where income tax department can invoke Market rate for sale consideration.

Hi,

Capital gain will be sale value minus index d cost of purchase.

Sale value in your case will be considered as 47.16 (I.e. stamp duty valuation rate as mentioned by you). For purchase price, you will have to get the property valued from a certified valuer. Valuation will be as on the date on which Property was constructed.

That value will be indexed till the date of sale to arrive at indexed cost of purchase.

Please feel free to call/ revert in case you are still unclear

Capital gain will be sale price minus index cost of acquisation minus index cost of improvement if any.

Here sale consideration will be 47.16 lacs

As you dnt have data regarding cost of acquisation,you have to get a valuation done from concerned person,then only capital gain can be figured out.

Hi,

In the absence of details of the expenditure, it would be prudent to get the value of the house from a certified valuer as on 2004.

Your capital gains would be computed by deducting the indexed cost of acquisition (land + construction cost. In your case the certified value by the valuer) from the sale proceeds (47.16 lakhs).

Hope that clarifies. You may get in touch with me for any further clarifications.

Regards,

Nikhil.

Hi

Capital Gains capital gains shall be calculated as sales value less indexed cost of acquisition and indexed cost of improvements. Indexations shall be done in accordance with the indices of the years in which construction / improvements had been made.

If the stamp duty value of the property is greater than the actual sales consideration, the stamp duty value shall be considered as sales value for calculation of capital gains.

You can claim exemption from capital gains under section 54 by way of reinvestment in another residential house property or bonds.

For cost of construction ,get the certificate form the approved valuer. From the sale proceeds deduct the indexed cost of land and cost of construction.

Please provide cost of construction and cost of land to arrive at the capital gain figure.