Is renovation of house considered for Cap Gains Exemption

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    MANMEET New Member

    Dear Sir/Mam

    I wish to clear 2 doubts regarding capital gains on sale of property. These are

    1. Suppose a property is sold for Rs 50 Lacs and we purchse a new property at Rs 30 Lacs but however we improve the property and renovate it after purchasing and spend another 20 lacs on it. Than would we be liable to pay capital gains or not, because registry of new property is 30 Lcas and additional improvement expenses are around 20 lacs that makes it to 50 lacs of actual cost.

    2. My second querry is that say Sale of property is 50 Lacs and total cost after considering indexatin comes out at Rs 30 Lacs. Than capital gains would be on 20 Lacs or 50 lacs. If on 20 lacs than can we can invest remaining 30 lacs as per own choice wothout any compulsion. Please guide.

  2. rudrabose

    rudrabose Active Member

    1. Yes, you can claim exemption under Section 54 for expenses incurred on renovation of property. Therefore total exemption allowed would be Rs. 50 Lakhs i.e. 30 lakhs for purchase and 20 lakhs for renovation
    2. If the sale price is 50 lakhs and the indexed cost of acquisition is 30 lakhs, then the capital gains would be Rs. 20 Lakhs.

    MANMEET New Member

    Thanks Mr Rudrabose for your prompt and clear reply.:)
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