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Income Tax: Rebate available on the cost of house repair

Income Tax
Written by bobby

Income Tax: Rebate available on the cost of house repair

Capital gains are taxed

Capital gains are taxed

As per tax rules, capital gains are calculated on the basis of the sale amount minus the cost of acquisition and the cost of the improvement. Both of these are calculated on the basis of the cost inflation index. The higher the cost of these two components, the lower will be the taxable capital gain and tax will be levied on the basis of this calculation. The cost of acquisition includes the cost of the house, registration fees, and broker’s fees. Capital expenditure is included in the cost of improvement, which increases the value of the property.

The case of 2009-10

The case of 2009-10

NRI Komal Gurmukh Sanghani and her husband had appealed in ITAT. This case pertains to the financial year 2009-10. Sanghani said that he had to upgrade the flat to make it habitable. Normally in such cases, the payment is made in cash only. Sanghani had claimed to include the interest of Rs 5.5 lakh on the home loan as a cost of acquisition. ITAT in its order said that the taxpayer may have claimed this interest under the head of income from house property. The tribunal has referred the matter to the IT officer for re-verification.

tax on sale of house

tax on sale of house

You must pay a capital gains tax on capital gains due from selling any assets. Taxes to benefit the sale of a home are calculated in two ways. If you sold a house after storing it for two years, it would be considered a long-term capital gain. Long-term capital gains collect capital gains tax of up to 20%. But if you have sold a house before 24 months, then this short term will be treated as a short-term capital gain. If you have done IT improvement or expansion after purchasing the property, then income tax can be issued by charging an indexation fee of the expense. This will reduce the capital gains tax burden.

About the author

bobby

Hi, I am Bobby. Blogger India. I love writing, and reading articles. Blogging is my passion. I have started my blogging career in 2016.

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