The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has clarified this in its recent order.
This will allow accurate calculation of capital gains or losses.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), in its recent order on the tax on capital gains from the sale of houses, has clarified that if a person spends anything to sell his house or flat can be included in the cost of the house. Apart from this, the cost incurred to increase the facilities of the house can also be included in the cost of the house. It will not be treated as capital gains and you are entitled to tax rebate.
20% income tax is charged on capital gains
If you keep the property for 2 years after buying it and then sell it, then the profits from it will be considered as Long Term Capital Gain (LTCG). On such taxable income you will have to pay 20% tax after the benefit of indexation. In such a situation, it is important for sellers to know what you can do in the cost of purchasing a house so that you can save tax.
What matters?
As per the case, the taxpayer showed long term capital loss on the sale of his flat. In this he included in the total price of his house the money he spent to repair the house or to enhance the facilities. This amount was 9.4 lakhs.
The taxpayer also wanted the benefit of long term capital loss on this. Among the facilities for which additional fees were paid, special waterproofing was done in the toilet, on the kitchen and doors and windows.
The builders are offering various facilities to the home buyers
An income tax department official said that the builders are offering various facilities to the home buyers, usually for which you have to pay an additional cost. These are different from special bathroom fittings, marble flooring, modular kitchens etc. In such a situation, taxpayers should make a proper preparation to avoid a lawsuit to get tax exemption while selling flats later. They should take care of all the bills.
You can adjust other benefits due to loss from selling house
If you earn a long-term capital gain from selling the property, you can also adjust it from the loss on any other property. Capital loss from residential property can be adjusted by carrying forward for the next 8 years. Capital from business property can be adjusted by carrying forward to the next 4 salons. You can adjust it from the short-term loss of other properties to avoid tax on short-term capital gains.
