Your property-related financial questions answered by R.P. Deshpande

I propose to sell my hire-purchased home. It was priced at Rs. 45,000, for the period of 20 years instalment. Now all the documents are with me. I paid a stamp duty of Rs.1,000.

Please let me know if the amount received through the sale of the property is eligible for income tax payment. If so, what will be the amount per lakh?

G.K. Menon, Thiruvananthapuram

The gains from the sale of immovable property attract capital gains tax. In your case since the property is held for more than three years, it is classified as ‘long-term’ capital gain. Hence the gain attracts 20 per cent tax (Rs. 20,000 per Rs. 1 lakh). While computing the gains, indexed value of acquisition is considered and allowable expenses are also deducted. Please approach a Chartered Accountant with relevant documents, who will guide you further.

 

I am a senior executive in a PSU and my wife is a government school teacher and both are employed and living in Chennai. We purchased a house in 2006 in Madurai by obtaining a bank loan and registered it in my name. Now, we are thinking of disposing the house and plan to purchase a property in my wife's name at Chennai after closing the bank dues in Madurai. Please let me know if the amount got from the disposal of property in Madurai can be directly invested in the new property in Chennai in my wife's name. Can the amount be shown and closed in my income tax return?

Chelladurai, Chennai

Income tax treats each individual separately. The sale proceedings from property owned by you attract capital gains tax. It is advisable to purchase a new house in your name or in the joint names of you and your wife and in such a case, the capital gains arising out of sale of the house in Madurai will not attract capital gains tax.

 

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