Capital Gain tax coming negative

POSTED BY shailendrag ON December 11, 2012 10:46 pm COMMENTS (9)


You guys are doing an amaing job. I am following your blog since an year or so and have learned lots of new things. This is my first query on this forum.

I have sold my row house for Rs. 53 Lacs just last week. I had bought it in year 2007-08 for Rs. 36 Lacs. I had taken home loan of Rs. 30 Lacs which have been closed now. I paid around Rs. 11 Lacs towards the home loan interest. So effectively, my net profit is not that much. Somewhere you had mentioned that this home loan and interest paid does not matter in the capital gains calculation. But I still want to mention it.

I tried to calculate Capital Gain using the formula given in one of your articles. Per it, my indexed Purchased Price is coming around Rs. 5560000 which is higher than selling price. Am I doing anything wrong?

1) Please tell me how much Capital Gains would be and how much tax I need to pay.

Also, i have opened SBI Capital gains account to avoid payting Capital gains tax and have transfered all the money to this account. I might buy new property within few months.

My questiond here are

2) Do I have to keep all this money (Rs. 53 Lacs) in this capital gains account or just the Capital Gains or Capital Gains Tax amount?

3) Can I close my personal loan of Rs. 4 Lacs from this Rs. 53 Lacs and use rest (i.e. 49 Lacs) for buying the new property?

Hoping to receive replies from you.

9 replies on this article “Capital Gain tax coming negative”

  1. bemoneyaware says:

    My post Capital Loss on Sale of House explains How to calculate capital gain using Inflation index CII,Short and Long Term loss, taxation on capital loss using setoff and carry forward.

  2. bemoneyaware says:

    Learnt a lot in trying to answer the questions. Planning to write an article on it. So THANK YOU

  3. shailendrag says:

    Thank you very much!

  4. bemoneyaware says:

    As you had Long term capital loss you can do following:

    A loss from house property can be set off against income from any other head in the same year.
    Any remaining loss can be carried forward for upto 8 years. In these subsequent years, this loss can be set off only against income from house property.
    A loss for a particular year can be carried forward even if the income tax return for that year is not filed by the due date.

  5. bemoneyaware says:

    Article link is Quoting from our article: On Selling a house

  6. bemoneyaware says:

    Tax exemptions under section 54 or saving in Capital account is applicable only when you have long term capital gain. As you have long term capital loss you don’t need to save it in capital gains account (Setcion 54 is given below)
    You can use your money in any personal loan, buy things, donate to bemoneyaware :-). It is not necessary for you to even buy another property.

    Quoting from our article: <a href=""On Selling a house
    Section 54
    You can claim tax exemption under Section 54 on the long-term capital gain on the sale of a house. To avail of this exemption, you must

    Use the entire profit to either buy another house within two years or
    Construct one in three years.
    If you had already bought a second house within a year before selling the first one, you could still avail of the tax exemption,

    You can also utilise Section 54F to avail of exemption on the long term capital gain made from the sale of any asset other than a house. Again, the sale proceeds should be invested only in a residential property , not a commercial property or a vacant plot of land. However, to avail of this benefit, you should not own more than one house.

    It’s possible that you are not able to make the required investment to avail of the exemption on capital gains before the due date for filing your tax return. In such a situation, the amount of capital gain or net consideration , as the case may be, has to be deposited in a separate account in a nationalised bank under the Capital Gains Account Scheme (CGAS) before the last date of filing your return for the relevant year

  7. shailendrag says:

    Thanks Manish, bemoneyaware.

    bemoneyaware, you are right. I got the same number from my calculation too and that’s why I posted this question.

    Manish, bemoneyaware and others,
    Based on the above, Can you please answer the following questions.

    1) Do I have to still keep all this money (Rs. 53 Lacs) in thecapital gains account whether if I want to invest it in real estate or NOT?

    2) Can I close my personal loan of Rs. 4 Lacs from this Rs. 53 Lacs and use rest (i.e. 49 Lacs) for buying the new property, If I decide to, in future?

  8. bemoneyaware says:

    Your calculations are fine. I entered your purchase and sale details on our calculator Capital Gain Calculator and details are as follows:
    Investment Type:Real Estate

    Time between :5 years 32 days

    Gain Type: Long Term Capital Gain

    Difference betweem sale and purchase price: 1700000

    CII of the Purchase Year: 2007 551

    CII of the Sale Year: 2012 852

    Purchase Indexed Cost:5566606.17

    Difference betweem sale and indexed purchase price: -266606.17

    Long Term Capital Gain with indexation:-53321.23

    So you have a long term capital loss and the same shall not be taxable. Such loss can be set off against income under the head long-term capital gain only and can be carried forward for a period of eight years.
    For details on selling a house (if capital gain) you can refer to our article On selling a house

  9. How is your indexed purchasing price coming that much ? You need to index only the base purchase price , not the interest paid. so index the 30 lacs only ! .. In which case the indexed purchase price has to be less than 40 lacs . Which means you will have to pay tax on the capital gains !

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