Capital Gains on House Sale

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  1. AXC

    AXC New Member

    Hello - could i seek your professional opinion on this transaction

    I purchased a flat in installments starting in 2007 and completing final payment and possession in Nov 2012.
    The property remained unregistered after possession.
    I am now selling (transferring) the property in Sep 2014 for a price which is about 38% above the total price i paid for it from 2007-2012

    a. What income will be considered for Capital Gains? Is it the 38% premium? or some indexed value?
    b. What will be the rate of Capital Gains Tax on this Income?
    c. If I use all of the sale proceeds immediately to pay for a property I have purchased in Oct 2013 (on loan), will this income be automatically exempt from Capital Gains Tax?
  2. rudrabose

    rudrabose Active Member

    a. For computing the cost of acquisition, the payment made by you is not important. The purchase amount as mentioned in the contract is important.

    b. For computing the Capital Gains Tax - the Cost of Acquisition would be indexed. The difference between the Sale Price and the Indexed Cost of Acquisition would be the Capital Gains.

    c. As the period of holding is more than 3 years, it would be classified as Long Term Capital Gain and therefore Tax rate would be 20%

    However, if the amount received is used to repay loan for a property which was purchased in the past 1 year - you can claim Capital Gains Tax Exemption and Nil tax would be applicable.
    AXC likes this.
  3. AXC

    AXC New Member

    Thank you Rudrabose. Can you also tell me how the holding period is calculated? Is it from the date of booking the flat or from the date of possession?
  4. rudrabose

    rudrabose Active Member

    The Period of Holding would be calculated from the date of booking the flat.
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