Capital gain tax from sale of property

Dear Sir/Mme

Under section 54 of the capital gains tax code. I wanted to know if on selling my house I can buy more than 1 property for my 3 sons in different localities, and still avail of the tax exemption?

Hi Friends,

 Thanks for sharing this important info .. I want to shear one important concept . 

• Transferring of properties can happen in several ways as per the applicable laws. Property can be transferred from an individual to another individual, from a company/ trust to another company/trust.
• Different methods for property transfer are Gift Deed, Sale, Release Deed, Lease, Leave & License and Will.
• All the methods of property transfer follow a particular process and have specific applicable laws to abide with.
• Majorly, it is the Transfer of Property Act that applies to such situations. The Act mentions the terms and procedure included in transferring a property.
• As per the Act each and every single buyer must ask for Mother Deed which clears the ownership status of the property. Give a careful reading to the number of times the property has changed its ownership. If in doubt, contact your lawyer before closing the deal.
• To further ascertain the ownership history of the property you must conduct a search report which provides all the relevant details about all the past transfers of the property along with the name of the owners who held it. A competent advocate can help you with the search report.

Bye the way , Statessalestax’s sales & use tax consultants offer for helping businesses identify & recover sales and use tax refunds for overpayments and reduce future tax liabilities.

I Purchased flat for 14,00,000 in Sep 2007 this amount is was mentioned on document apart from this i paid 1,13,230 towards registration charges. 

My First question is When we are calculating Long Term capital gain do we need to consider only 14,00,000 or i can add registration amount also towards cost of acquastion?

Same flat was sold in May 2012 for 25,00,000 In this case as per Govt. value flat cost is 27,54,000 and buyer paid registration amount on this amount i.e. 27,54,000 but in document we mentioned it as 25,00,000 only

My Second question is In Long Term Capital Gains we need to consider 27,54,000 or 25,00,000 ?

As i sold this flat after 4+ years this comes under LTCG, but in some articale i read that if we spent some amount during this 4 years we can add that amount to Cost Acquastion that means if i spent 50,000 for repairs on my house in 2008,

then this 50,000 will be cost indexed and then it will added to 14,00,000 ( which my intial cost of Flat) 

My Third Qustion is,, The above calculation is correct or not ? If it is correct what type of bills we need to produce for the bills example i made some wood work inside the flat is it ok if i show the bills for the same?

Dear sir,

A Pvt limited company sale of land and building Rs.12,00,000 ,cost of acqusition of land Rs.2,00,000 in the year 1993-94 and the company constructed building  and capitalised in books Rs.5,00,000 ,depriciation claim on such building, WDV value of building as on date of sale Rs.3,00,000. 

company followed

  total sale considaration -land value -WDV value of building (i.e; 12,00,000 -2,00,000-3,00,000=7,00,000)

Rs. 7,00,000 istreated as Short-term Capital gain .

whether it is correct or not

if it is not correct  Plz tell me

how to calculate the Long-term Capital gain & Short-term capital gain

 Query-1:Is this  exemption under the Section 54 limited to only one house .

There is no such restriction in Section 54, unlike in S 54F.

Query-2: If have already more than one house in my name , can i buy another one to offset the capital gain .?

Yes, under S.54

Hi

I have one query to save capital gain tax as per law

The transferor assessee should purchase a residential house in India within a period of one year before or two years from the date of transfer or construct a residential house within three years from the date of the transfer of the original house. (Construction must be completed within these 3 years.)"

Hopefully, before selling a business, you meet with a CPA or tax accountant and get an estimate on how much of your proceeds will be going directly to Uncle Sam if you pay them in a lump sum at time of sale. You don't want to save this surprise for after all is said and done, because not only will it most likely be a shock, but you will have given up your chance to do anything about it.

Planning is everything. I will assume you are not doing a 1031 business exchange, that is selling your business and buying another similar business taking into consideration all the IRS guidelines and timelines. It's pretty rare to see this, but it can defer all of your capital gains tax if done correctly. A 1031 Exchange is more commonly implemented with real estate.

Depending on how the business is sold, the nerja villas gains may be taxed as long term capital gain, short term capital gain, ordinary income, etc. and if you are selling an asset in a C-Corp you may face double taxation. So, the idea is to minimize your tax bill and maximize your proceeds no matter what situation you are in.

One option is with a Self Directed Installment Sale. The structure must be in place before the buy/sell agreement is signed. The gist is to receive the sale proceeds in installments and only pay capital gains tax as you receive the income. This has the effect of allowing the majority of money you would have paid immediately in taxes to continue earning compounded interest for you for many years, thus increasing your bottom line by a significant amount.

The details are a bit too complex to fully outline in a short article, but both an LLC and a Trust are created for you and set up meet IRS criteria for favorable taxation of installment sales. Your asset gets transferred to the LLC prior to sale, and your buyer purchases from your LLC. The trust buys the shares of your LLC from you via an installment agreement and you pay taxes on your gain only as you receive the payments.

You, the seller, are able to control when the payments begin and how long they will be spread out. This allows for maximum flexibility to control your income, and plan for future tax savings as well. Since your buyer paid cash in exchange for your property, you are not dependent on them to make the installment payments and you have transferred the risk of refinance or default. This is done by using an independent third party administrator and your money is safely invested in a principle protected insurance product to be used solely for the purpose of paying the installments.

If you pass on before receiving all of the payments due, the remainder of the installment payments pass to the beneficiaries of your choice.

Seeing an example of a taxed sale vs. a Self Directed Installment Sale side by side will show you how much of a difference in overall return this strategy will provide. This can make the process of the sale more palatable and provide a dependable income stream for retirement.