Can I reduce Capital Gains on House by showing renovation or repair work ?

POSTED BY Malik Khan ON November 21, 2013 8:14 am COMMENTS (8)

Hello!

Recently I sold my house for Rs. 59,92,000. This house was purchased by my mother in Jan.1992 for Rs.3,80,000.

Sir,what would be the Capital Gain and is it possible to reduce this capital gain by showing some renovation/extension or repairing works to the extent of Rs.10–15 Lacs on this house prior to it’s sale ? Advice pl.

8 replies on this article “Can I reduce Capital Gains on House by showing renovation or repair work ?”

  1. ashalanshu says:

    Dear Nsabhyankar, yes it’s Renovation year CII. Whatever you had spent in actual is eligible.

    Thanks

    Ashal

  2. Malik Khan says:

    I will check it out…Thanks for the info.

  3. nsabhyankar says:

    hi Ashal,

    just a doubt, should it be the ‘CII of year of Renovation’ in the second bracket, in the multiplier for the renovation amount?

    Also, in this case, the renovations are substantial. However, are there any guidelines or rules to decide what kind of renovations / repairs can (not) be considered for LTCG calculation?

  4. ashalanshu says:

    Dear Malik, let me give it to you. You need below things for LTCG calculation.

    CII of 1992-93 FY
    CII of year of Renovation
    CII of sell year

    Indexed purchase price = Purchase price * (sell CII/Purchase CII) + Renovation amount * (sell CII/Renovation CII)

    LTCG = Sell price – Indexed purchase price

    Here CII = Cost Inflation Index.

    Thanks

    Ashal

  5. Malik Khan says:

    Thank You Sir….I will have to check what is LTCG calculation…my querry has not been answered complete…Request…I shall be thankful if you can give me an approx. figure of my Capital Gain that I will have to invest within a year.

  6. ashalanshu says:

    Dear malik, in that case, Yes you may include repair and renovation work also in your LTCG calculation.

    Thanks

    Ashal

  7. Malik Khan says:

    A lot of repair work was done…the house was not less than atleast 40 years old…lime contruction and load bearing walls…we removed the whole old plaster and got the entire house replastered with cement sand..some alterations also..I have withdrawals in my bank account to the extent of 9L…

  8. ashalanshu says:

    Dear malik, was this renovation actually done or you want simply to use it for tax avoidance?

    thanks

    Ashal

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