Capital gain on commercial property

Dear Pankaj, Thanks for your help in advance.

Here are my questions with respect to CG - I have bought one commercial office in my wife's name at Pune. Sale agreement date=27-May-2008, Possession Date=04-May-2010, Agreement value=Rs 13.32 Lakhs

Q1: The 3 year window applicable for long term capital gain is from agreement date or possession date?

Q2: If we sale this property now, what will be the capital gain tax applicable? As she is housewife, there is no income till date in her name.

Q3: Can we include stamp duty fee, registration, property tax paid as cost while calculating the CG tax?

Q4: To avoid the CG tax, do we need to reinvest in commerical property only or what are the options to save the CG tax, which is applicable in this case.

asked Jun 12 '11 at 10:06 by sharmadr 1224

  1. Ideally long term capital gain should be calculated from registration date. In case their has been a unwanted delay in registration then possession date can be treated.
  2. If you sell out this property now, whole profit will be added to your income and will be taxed as per your slab rates. As you bought property from your income in name of your wife. Legally the profit generated from it will be taxable to you.
  3. Yes, stamp duty, registration fees can be added to purchase cost but not the property tax.
  4. In your case, there is no option to save tax. But if it would have been a Long term gain, income tax could have been saved by investing into a residential property or into capital gain bonds.

answered Jun 13 '11 at 12:40 by Pankaj Batra 5.2k320

Dear Pankaj, Thanks for your quick response. But as per my registration date, I have hold the property for 3 yrs then why not long term CG is applicable? I am confused with your response.
(Jun 14 '11 at 10:15) sharmadr
Sorry for the confusion. Was registration done on 27-May-2008 or it was just an buyer-seller agreement. In case registration was in 2008, then LTCG is applicable.
(Jun 14 '11 at 12:26) Pankaj Batra

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Asked: Jun 12 '11 at 10:06

Seen: 2,052 times

Last updated: Jun 14 '11 at 12:26