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Selling Old House: Tax Implications and Expense Claims

Milind Vadjikar |1157 Answers |Ask -Follow

Insurance, Stocks, MF, PF Expert - Answered on Nov 16, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more

Asked by Anonymous - Nov 10, 2024Hindi

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I am selling an old house. As per new tax regime LTCG is 12.5% plus so many surcharges. The cost as per valuer is 15 lakhs in 2001. The sale price is 4.0 CR. Two questions : Q 1) Can I claim the renovation on the old house ? How much and how many times ? What is the documentation required as the renovation was done in 2005 and 2015 for 6-8 lakhs each. But no bills are available now. 2) what are the other expenses which can be claimed for eg Brokerage fees, Consultation from Advocate fees , travel and hotel expenses for my family for doing the sale registration ? Is there a limit ? Any thing else that can be claimed ? Kindly let me know your advice.

Ans: Hello;

Since your house is old, you have two options:

1. Sell without indexation and pay 12.5% LTCG tax.

2. Sell with indexation and pay 20% LTCG tax.

In both cases you are allowed to deduct renovation and transfer expenses.

You need to consult a CA to know exactly what is allowed and what is not allowed as per ITax Act.

Also if you get any queries from IT Deptt., later on, you can rely on the written advice and consultancy provided by a practising CA.

Best wishes;

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Hello Sir, I need your advice in sale of flat, Sir, I booked one Under construction flat @ Virar In June 2004 for Rs.17,74,000 and paid Stamp duty of Rs.67,440 and the Registration charges of Rs.17,740 on that , of which I for possession in June 2014, Sir, I sold that flat in June 2023 for Rs.41,50,000/- Sir, how much I m liable to pay LTCG on that and within how much time I have to pay that tax to the Income tax Authorities, as I do not intend to invest in the new property.

Ans: For calculating tax on long term capital gain on house property, indexed cost of acquisition is required be reduced from sale considered.

Indexed cost of acquisition can be calculated with the help of income tax calculator available at https://incometaxindia.gov.in/Pages/tools/indexed-cost-of-acquisition-or-improvement.aspx.

Property is booked in 2004 but payment would have done gradually till 2014. Thus, indexation benefit is available on each of the payment from each of date of payment.

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Question by Sriramulu - Mar 27, 2024Hindi

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Sir, I am intending to sell our FLAT at Hyderabad, which was purchased in the year 2014 for Rs.24,00,000/-, now the present market rate is Rs. 65 lakhs (approximately). If I sell the Flat for 65 lakhs, how much tax(LTCG) I have to pay or is there any exemption under IT Act as I am not interested in purchase of another house, instead, I am proposing to purchase Agricultural land with the sale proceeds of my Flat. Anxiously awaiting for your valuable advice in this regard, Thanking You Sir, Yours faithfully, G.Sriramulu, Retired employee, HYDERABAD.

Ans: Based on the information you've provided, you'll likely incur Long-Term Capital Gains (LTCG) tax if you sell your flat in Hyderabad. Here's a breakdown:

Scenario:

Flat purchased in 2014 for Rs. 24,00,000
Expected sale value in 2024: Rs. 65,00,000
Holding period: Over 24 months (Long-Term Capital Gains)
No reinvestment in another residential property
Tax Calculation:

Capital Gain: Rs. 65,00,000 (Sale value) - Rs. 24,00,000 (Purchase value) = Rs. 41,00,000
Indexation benefit: However, you'll likely benefit from indexation, which adjusts the purchase price for inflation, reducing your taxable gains. You can calculate the indexed cost using the Cost Inflation Index (CII) provided by the Income Tax Department for the relevant years.

LTCG Tax Rate: After considering indexation, the remaining capital gain will be taxed at 20%.

Important Note: I cannot provide the exact tax amount due to the complexity of indexation calculations.

Exemption Not Applicable:

Unfortunately, purchasing agricultural land doesn't qualify for exemption under Section 54 of the Income Tax Act, which offers exemption on LTCG from the sale of residential property if the gains are reinvested in a new residential property.

Recommendations:

Consult a Chartered Accountant (CA): A CA can help you calculate the exact LTCG tax liability after considering indexation and other relevant factors. They can also advise on any potential tax-saving strategies that might be applicable in your case.
Explore LTCG Investment Options: While you're not interested in buying another house, consider exploring other options to potentially save on LTCG tax. These include:
Capital Gains Bonds: Investing in specific long-term capital gains bonds issued by the National Housing Bank (NHB) or other government bodies can help you save tax under Section 54EC.
New Residential Property: If you're open to the idea of a new property in the future, remember the exemption under Section 54 applies.
Remember: This is just general information, and it's crucial to consult a professional for personalized tax advice based on your specific situation

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Mutual Funds, Financial Planning Expert - Answered on Apr 12, 2025

Asked by Anonymous - Apr 12, 2025Hindi

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I am 38 year old in IT, draws a little over 3L per month, married and 3 kids. First one in 5th standard, second in UKG and third is in play school. Wife working in IT as well drawing 2L per month. We have Two houses - one individual house estimated value (1.5 CR) with 18L loan pending paid by me (26.5k per month EMI) and other apartment nearing completion estimated value (1CR) with 50L loan pending paid by my wife (47k per month EMI). As far as other savings are concerned I have around 50L in MFs and my wife has 20L. I have 5L in stocks, 5L in FDs and 5L in other markets. My PF value is around 25L. My wife PF and Gratuity together around 20L. We have Vehicles estimated to give 10L. Currently living in a metro city for our work with expenses upto 2L per month including loans, kids education, rent etc Please tell us what more needed for us to retire and move to less expensive tier 2 place where living expenses can be between 50k - 1l name month.

Ans: Current Financial Overview
Age: 38 years

Monthly Income: Rs. 5 lakh (combined)

Monthly Expenses: Rs. 2 lakh (including EMIs)

Assets:

Mutual Funds: Rs. 70 lakh

Stocks: Rs. 5 lakh

Fixed Deposits: Rs. 5 lakh

Other Investments: Rs. 5 lakh

Provident Fund: Rs. 45 lakh (combined)

Vehicles: Rs. 10 lakh

Liabilities:

Home Loan 1: Rs. 18 lakh (EMI: Rs. 26,500)

Home Loan 2: Rs. 50 lakh (EMI: Rs. 47,000)

Retirement Corpus Estimation
Target Monthly Expenses Post-Retirement: Rs. 1 lakh

Expected Retirement Age: 50 years

Life Expectancy: 85 years

Inflation Rate: 6%

Expected Return on Investments Post-Retirement: 8%

Based on these assumptions, you would require a retirement corpus of approximately Rs. 6 crore to maintain your desired lifestyle in a tier-2 city.

Children's Education Planning
Child 1: Currently in 5th standard

Child 2: Currently in UKG

Child 3: Currently in play school

Assuming higher education costs of Rs. 25 lakh per child in today's terms and considering an education inflation rate of 10%, the future cost for each child could be significantly higher. Therefore, it's essential to start dedicated investments for each child's education.

Action Plan
Increase Savings: Aim to save at least 40% of your combined monthly income.

Debt Reduction: Prioritize paying off high-interest debts to reduce financial burden.

Investment Strategy:

Continue investing in mutual funds with a focus on long-term growth.

Diversify your portfolio to include a mix of equity and debt instruments.

Emergency Fund: Maintain an emergency fund equivalent to 6 months of expenses.

Insurance:

Ensure adequate life insurance coverage for both you and your wife.

Obtain comprehensive health insurance for the entire family.

Final Insights
You're on a solid financial path with a strong income and investment base.

Focus on increasing your savings rate and reducing liabilities.

Plan systematically for your children's education expenses.

Regularly review and adjust your investment portfolio to align with your retirement goals.

Consider consulting a Certified Financial Planner to tailor a comprehensive financial plan for your family's needs.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

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I got 95.87 percentile can I get Nit chemical give me list of nits

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Hii sir muje aaose puchhna hai mere bete ne ssc kiboard ki exam fi hai aage ki padhai k bare me thoda confuse hai hambe dmit bhi karvaya ...to dmit k councelar ne hame science stram lene se mana kar diya hai aur engineering me bhi dalne se mana kiya hame use cse diploma me karvana chahte the lekin councelar ne commers aur arts me jane ki salah di hai dmit test par kitna trust karna chahiye kya kare

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sir mene 2022-2023 baords diya tha pass nhi hua 2023-2024 diya hn pass hoga but percentage km aye then 2024-2025 krliya hn 90 percent aaye hn isme mene as a regular students karya hn naaki ki improvemnt likha nhi aayega school balo ne confirm kiyaa hn kya ab jee de skta mains and adv 2026 mein iwant to scoore good in adv sir 2026 with good rank

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Sir I have one doubt I'm a 1st dropper of jee and I have give 4 times jee mains and 0 not qualified for advance yet, but if I take 2nd drop I'm eligible for mains but not for advance so what if I give my board exam again from different board like nios this year and give jee advanced next year am I eligible for advance as a fresh candidate,if yes then ok but if no so how will they get to know that I already gave So what if

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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