LTCG for property with modifications done

Hi.. my mother bought a land in 1992 for 1lac and took a loan of 3 lac in constructing a house there, later in 2004 i settled the existing loan and took a fresh housing loan of 13 lac to modify and expand the same. today we intend to sell the property for 1.5cr and buy a flat for 60Lac and another for 50lac, can you please help me with the LTCG tax calcuation for this situation.

asked May 09 '11 at 09:49 by venk 1111

Cost inflation index (CII) for year 2011-12 has not been notified yet, so below calculations have been done with CII of 2010-11. Once CII is declared, you may do the actual calculations again.

Purchase Year = 1992-93
Purchase and initial construction Cost = 400000
Cost Inflation Index (CII) for purchase year = 223

Further Construction Year = 2004-05
Further Construction Cost = 1300000
Cost Inflation Index (CII) for Further Construction year = 480

Sale Year = 2010-11
Selling price = 15000000
CII for sale year = 711

Indexed Purchase/Construction Cost = 400000 x (711/223) + 1300000 x (711/480) = 3200961
Long term capital gain = 15000000 - 3200961 = 11799039
Income tax on capital gain = 11799039 x 20% = 2359807.8

As long term capital gain is around 1.18 crore. In order to save income tax on this amount, whole of this amount will have to be invested into a single property.

if you buy two properties, only the higher priced one will be considered (60 lacs) and you will have to pay income tax on remaining amount (58 lacs) @ 20%.

answered May 12 '11 at 13:46 by pankaj 5.2k320


Know someone who can answer? Share a link to this question via email, twitter , or facebook

Your answer
toggle preview

Follow this question

Once you sign in you will be able to subscribe for any updates here

Markdown Basics

  • *italic* or __italic__
  • **bold** or __bold__
  • link:[text]( "title")
  • image?![alt text](/path/img.jpg "title")
  • numbered list: 1. Foo 2. Bar
  • to add a line break simply add two spaces to where you would like the new line to be.
  • basic HTML tags are also supported



Asked: May 09 '11 at 09:49

Seen: 1,430 times

Last updated: May 12 '11 at 13:46