Vishal (Sales) 21 February 2014

Tax on sale of redeveloped house

Dear Sir

I would like to know if tax will be applicable on a sale of Flat which was alloted to us. Note we purchased the house in 1997 , went for redevelopment in 2008 and got possession in 2013 after redevelopment.

Rgds

Vinod

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5 Replies

R.V.RAO (retired) 22 February 2014

there is a long term capital gain on sale of flat,being more than 3 years holding time. for your original purchase cost of 1997 and also for cost of redevelopment of 2008 - the cost indexation will be done , .From .the total sale value of flat deduct total indexed cost arrived above. .the diff is capital gain.

capital gain is taxed @20%plus 3% edu.cess on tax.

you have 2 options now.either pay cap.gain tax at above rate,or else park the , capital gain amount in capital gain account scheme in a designated bank ,before the due date of filing tax return.use the capital gain amount in the account to invest as per sec 54F/54EC,to avoid cap.gain tax.

note:

i assumed a simple case of a single flat redeveloped and sold.

i did not assume your old flats complex given by you to a developer who will build new flats and share some flats with you.

Vishal (Sales) 23 February 2014

Please note we are going to Invest in New Property as soon as we recieve the amount. In that case does cap Gain tax is Still Applicable....

Vishal (Sales) 23 February 2014

To Be more Precise, it was an old building which was re developed and we have just got possession of new Flat in that Building, we have been Tenents Since 1997

R.V.RAO (retired) 23 February 2014

yes, if you buy a new flat investing the full amount of capital gains,then you are not liable for any tax.,.

( I hope you are not owner of that old building, which was demolished and then, the builder constructed an apartment complex where in , you got some flats as your share and builder got some flats, as his share.

i raised this doubt,since you wrote that you got " new flat in that building" .)