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Is it legal to tax completely underwater land?

India: tax implications on selling residential land?

  • I bought a residential land TWO years back for Rs. X. Now, I need money to buy a flat and so I plan to sell the land. The flats' cost is 2X. And I am able to find a buyer for my land for a price of 2X (lucky me !?). My question is: Will there be any Tax that I have to pay for my land sale transaction ? Or will it even out with my flat buying expense ? Note that I am already in the higher tax bracket and paying lots of tax to my country ! Thanks in Advance !

  • Answer:

    The answer given by Sharmaji is applicable only you you hold the property for 3 years complete. The first answer is the right answer in my opinion. Further for availing benifit of of having it "evened out" you should not have more than one residential properties. You must take advice of good conusltant.

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if u sell land you are liable to pay capital gains tax on the profit @ 20% plus applicable surcharges.It will not even out with your flat purchase. if u want to even out the gains with investment in a flat/house u have to wait for one more year. minimum holding period is three years.

chit

You are liable to pay income tax on the profit (capital gains) worked out according to cost inflation index. Had it been the residential house, you would have got the benefit of tax exemption on repurchase of new residential property. The cost inflation index for the financial year 2006-07 is 519. The calculation of capital gain tax on property is:- Sale price Minus the Cost of acquisition X cost inflation index of the year in which asset is sold (divided by) cost inflation index of the year of acquisition. The resultant figure is capital gain on which you are liable to pay income tax.

sharma p

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