Query on Capital gain on selling a house

POSTED BY Saurav Mohanty ON July 24, 2014 10:43 pm COMMENTS (4)

Hi Investors,

I have a confusing situation before the registration of my flat.

I have purchased a flat as ”resale” from an owner after it was launched by the builder and before the old owner took the possession in 2011.

I got a bank loan of 20 lakhs and payed 5 lakh check to the previous owner. So the builder replaced my name in the old owner’s name in his documents and when I received the papers the value of the flat was mentioned as per the old value i.e. 11 lakhs.

Now at the time of registration the builder is doing the valuation as 11 lakhs and paying the stamp duty(6%) as per that. This comes around 70000 including some paper fees as well.

My Question is as follows.

1- Should I go ahead and register the property on 11 Lakhs or go for the current valuation of the property (which the builder mentioned is not possible and they are not going to do that as they have to pay some taxes as well)?

2- Let\’s say I did the registration on 11 lakh now and  I want to sell the property after 5 years then how the capital gain calculation will be done ?

Will it the purchasing price actual (25 lakhs) be taken into consideration or they will take 11 lakh as the purchasing price. ?

Capital gain = (selling price – 25 or 11 lakh*(index of selling year/index of 2011))* 20%

Please help.

Regards

Saurav

4 replies on this article “Query on Capital gain on selling a house”

  1. Credexpert says:
    July 30, 2014 at 7:32 pm

    Dear Saurav,

    If you have purchased the property at Rs. 25 lakhs and the agreement between you and the seller specifies the same, then the property should be registered at a value of Rs. 25 Lakhs.

    However, we recommend you check this with a lawyer as the case involves a tripartite agreement with the builder.

    Regards,
    Credexpert

    Reply
  2. ksaurav54 says:
    July 30, 2014 at 3:14 pm

    Hi Credexpert,

    Does the registration value has anything to do with the capital gain calculation?

    Let’s take this case
    Someone has purchased a property directly from the builder and the value was
    25 lakh, but he registered the property after sometime and since the value has appreciated he did the registration on 30 lakh as per current value.

    So in this case, when he sells the property after some time, then the purchase price will remain as 25 lakh, not 30 right ?

    Regards
    Saurav

    Reply
  3. Credexpert says:
    July 26, 2014 at 11:25 am

    Dear Saurav,

    Please clarify the following:

    1. What is the value of the property as per the agreement with the seller?

    2. If the property is registered as Rs.11 lakhs, what were the documents provided to the bank to avail a loan of Rs.20 lakhs?
    If your purchase agreement for the house states that the value is Rs.11 Lakhs at the time of your purchase, then capital gains will also be calculated as per this value.

    Regards,
    Credexpert

    Reply
    1. ksaurav54 says:
      July 30, 2014 at 3:03 pm

      Hi Credexpert,

      Please find the answers as follows.
      1- The value of property is 25 lakhs as per the agreement with the Seller. I had a tripartite agreement with the Builder , the seller and me, since the property was not complete at that time for the registry.
      But the property value copy from the builder, which was provided to me, shows the value of the property as 11 lakhs.
      2- The property is not registered yet. I had provided the tripartite agreement to get the loan.

      Now the Builder has asked me to register the property. They are registering the property at the old rate. This is where I have the confusion.

      I hope I am clear on this.

      Reply

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