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 Batra 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: 1,510 times

Last updated: May 12 '11 at 13:46