Please answer to my queries

Q: Q1: I bought a house in Bangalore at 40lacs, 5 years back, now I want to sell it. I am getting 60 Lacs for the house. To save the Capital gain tax, do I need to invest the complete amount for purchasing the new property/house or If I invest only profit amount that will save me tax (i.e, 20Lacs of profit from sold house and rest I will take loan from bank)
Q2: Further to above query, I took loan from bank for 30Lacs for the same house. Now for calculating gain the interest amount paid to bank will be subtracted form the profit earned by selling the house?

Sasha, Apartment Resident, Bangalore

21st August 2012

Property Selling in Bangalore

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Just to add to previuos question.. I am selling a flat which is not registed but just an agreeent in my wife's name and i got some appreciation before i registered it, now i want to sell the same flat which is in my wife's name as per aggrement and clear the loan on a flat which is my name . Do i need to pay tax here ?

Venkat, Apartment Resident

19th September 2013

Comment

If you don't plan to construct your own property, you can even book a residential under-construction house to avail the exemption.

Umesh, Bangalore

23rd August 2012

Comment

The amount of money you will have to pay tax on will be approximately Rs 3 lakh .
and the amount of tax you will have to pay will be Rs 60 thousand only.

The LTCG( long term capital gains) are taxed at 20% with the indexation benefits.

Indexation is a process through which the value of the property is inflated. The central board of direct taxes issues a factor for every year. The factor is known as the Cost Inflation Index (CII) and tracks the increase in the general price level.

We consider that you have bought your property in the financial year 2007-2008. So, using the the standard formula the CII value issues by government for every financial year:

20% of the [(Price of sale) – {Original price X ( CII for the year 20011-2012 / CII for the year 2007-2008)}]

= 20% of the [(60 lakh) – { 40 lakh X (785/ 551)}]
= 20% Rs 3 lakh

This is an approx figure please consult some legal adviser.

Aditi, Mumbai

23rd August 2012

Comment

One way to get an exemption on LTCG received from sale of a house property is to purchase a new residential house within a period of one year prior to or two years after transfer of the original house.

Umesh, Bangalore

23rd August 2012

Comment

If you sell the house after three years or 36 months, then it's considered long-term capital gain (LTCG) and you have to pay 20% of the profit as tax.

santu, Bangalore

23rd August 2012

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