Long term gain
ChandanLawyersclub
(Querist) 29 July 2014
This query is : Resolved
Dear experts,
I have joint house with my wife.
All money was paid by me only. My wife do not files any IT return.
from Capital gain amount I want to buy next property in my name only.
Property bought in 2006-07 , selling in 2014-15.
Can I buy next house, only my name from capital gain amount.
ChandanLawyersclub
(Querist) 30 July 2014
Thx Mr. Siddique, hope if I buy the house in my name from capital gain amount, I need not to pay any tax. Hope same thing you also want to say.
T. Kalaiselvan, Advocate
(Expert) 31 July 2014
In real estate, if you have held the asset for more than 3 years, it is treated as long term.You can very well buy. The taxation will be 20% with indexation benefit.
Indexation Benefit: Inflation constantly erodes the real value of money through the rise in prices. Due to this even if your investments have risen four times during a particular period, the purchasing power of money might have went down by, say, 50% from the time of your investment. "To reduce the impact of inflation on your investment, indexation benefit is provided in calculating long-term capital gains. Through this benefit you can adjust your capital gains from inflation by applying an appropriate factor from cost inflation index to the original units,"
Here is how indexation benefits works:
Cost of purchasing a property in April 2007 - Rs 35,00,000
Cost of selling the property in May 2011 - Rs 50,00,000
Inflation Index- 2007-2008 - 551
2011-2012 - 785
Indexed Purchase Cost- 35,00,000 x 785/551= Rs 49,86,388
Long Term Capital Gains= 50,00,000-49,86,388 = Rs 13612*
Tax on LTCG= 13612 x 20%= Rs 2722
Education Cess= 2722 x 3% = Rs 82
Total Tax on LTCG = Rs 2804
