Home cost of acquisition, cost of improvement etc

POSTED BY kkk ON January 14, 2013 7:46 am COMMENTS (3)

I have few queries regarding value of home and notional rent etc. Can anybody please answer them?

1. What is the cost of acquisition for a flat? Is it what paid to builder (receipts available) or the amount quoted in registration documents (which in general is kept low)?

2. For self constructed homes, only plot value is given in registration documents and in many places actual construction happens without receipts (especially in villages and towns)as you just approach some local contractor for construction. How to fix cost of acquisition for this?

3. Similar question for home improvement. Most transactions happen without receipts even if money is paid using cheques. How to fix home improvement cost for this and how to defend in case the return goes for scrutiny?

4. Many places say for un occupied homes notional rent is declared. But how to get the value of reasonable notional rent. Obviously I can’t say that my notional rent is Rs100 per month.

3 replies on this article “Home cost of acquisition, cost of improvement etc”

  1. kkk says:

    Thanks Ashal. Just one more doubt.
    If we go for govt aproved valuer, how does the LTCG work out. Will the valuer give value for the year of construction or present year? If he gives for present year, does that mean indexation benefit can not be used and the tax is to be paid at 10%?

    1. dear kkk, for example purpose, if the self construction was done in FY 1990-91, please ask the valuer to provide the cost of construction for that FY only. Based upon the valuation for that FY, you can calculate the LTCG.

      Thanks

      Ashal

  2. Dear kkk, I’m trying to answer your queries.

    1. What is the cost of acquisition for a flat? Is it what paid to builder (receipts available) or the amount quoted in registration documents (which in general is kept low)?
    If you do have receipts, the valuation quoted in your receipts ‘ll hold good.

    2. For self constructed homes, only plot value is given in registration documents and in many places actual construction happens without receipts (especially in villages and towns)as you just approach some local contractor for construction. How to fix cost of acquisition for this?
    In this case, you w’d have to take a certificate from the govt. approved valuer for the valuation of the construction.

    3. Similar question for home improvement. Most transactions happen without receipts even if money is paid using cheques. How to fix home improvement cost for this and how to defend in case the return goes for scrutiny?
    In this case, you w’d have to take a certificate from the govt. approved valuer for the valuation of the construction.

    4. Many places say for un occupied homes notional rent is declared. But how to get the value of reasonable notional rent. Obviously I can’t say that my notional rent is Rs100 per month.
    You w’d have to find out the rental value of your locality from the local municipal office.

    Thanks

    Ashal

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