Claiming deduction

Claiming deduction

I sold a property for 1 crore
Invested 50lakhs on buying 20 year old apartment and spent 30 Lakshmi for renovation
I have clear bills for 20 Lakhs spend for civil work and another 10 Lakhs for designing

My question is, is it possible for claiming deduction from capital gain on both purchase and renovation

Asked 8 years ago in Capital Gains Tax

Dear sir,

It is not possible to take capital gain deduction for renovation work.

It is only possible in case of purchase or new construction.

Thanks and Regards

Abhishek Dugar

CA, CS, B.Com

Abhishek Dugar

CA, Mumbai

3576 Answers

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Talk to Abhishek Dugar

Without indexation for cost of acquisition and improvement,  tax is calculated for 10% in long term capital gain

Asked 8 years ago

No, not in case of sale of property. This relaxations only available in case of listed securities.

Please feel free to call/revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA, CS, B.Com

Abhishek Dugar

CA, Mumbai

3576 Answers

183 Consultations

Talk to Abhishek Dugar

As you spent on renovating the house, which is capital in nature, you can claim deduction as cost of improvement of the house while calculating income taxable under the head ‘capital gain’. Further, since the house has been held for more than 36 months, it would be treated as a long-term capital asset. In such a case, indexation benefit shall also be available on the cost of improvement, starting the year in which the cost was incurred.

Shyam Sunder Modani

CA, Hyderabad

1409 Answers

164 Consultations

Talk to Shyam Sunder Modani

I'm talking about cost of improvement for the newly bought (20 year old apartment) from the capital gain amount
2015 Aug sold my property

2015 Sep bought apartment worth 80 Lakhs
2015 Sep - Jan 2016 improvement work done like flooring, sanitary fittings, painting, water proofing,carpentry etc for 20 Lakhs
Both cost of purchase and improvement comes to 1crore
Now can I claim 1 crore deduction from the capital gain amount

Asked 8 years ago

YES YOU CAN

Shyam Sunder Modani

CA, Hyderabad

1409 Answers

164 Consultations

Talk to Shyam Sunder Modani

Dear Sir,

This is a litigative manner as you will have to show cause how the cost of improvement is the cost of purchase in order to set it off against your Capital Gains.

Trust this clarifies your query.

Feel free to call back/ get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP.