Business
Short-term capital gains get taxed as regular income
Updated : Mar 24, 2018, 04:16 AM IST
Here is how the income from house property will be calculated for you and your spouse assuming both of you own 50% of the flat and also each pay 50% of the loan installments :.
For each of You :
i For Chennai Flat :
50% of the annual rental – 30,000*50%*12 = 1,80,000/-
Less:
Standard Deduction @ 30% = 54,000/-
Bank Interest – 45,000*50%*12= 2,70,000/-
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(-) Rs. 1,44,000/-
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B ) For each of you - For Mumbai flat (self occupied)
Rental value taken at Rs. 0
Less:
Standard deduction at 30% Rs. 0
50% of the annual rental -1,00,000*50%*12 =
Rs. 6,00,000 but limited to a maximum of Rs. 2,00,000/-
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(-) Rs. 2,00,000/-
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Total loss under the head income from house property is Rs 3,44,000/- (Rs 1,44,000+Rs 2,00,000) .
For the accounting year ended March 31, 2017 each of you can set off Rs 3,44,000 (total Rs 6,88,000/-) against income from any other head including salary or business income.
From accounting year ended March 31, 2018 each of you can set off only Rs 2,00,000 (total Rs 4,00,000) against income from any other head including salary or business income and carry forward the loss of Rs 1,44,000 each for set off in future years against income from house property in future years.
I urge you to take proper professional advise before finalising the sale. Any advise given on the basis of incomplete facts may not be correct or applicable and in case of flat sales the tax impact can be very large. Please remember that if the capital gains is deemed as short term instead of long term , not only no indexation is available but you also wont be able to claim exemption under section 54 (buying another residential flat) or section 54EC (capital gain bonds). Short-term capital gains get taxed as regular income.
Here is a decisions that is in favour - [2017] 79 taxmann.com 67 Anita D. Kanjani v.Assistant Commissioner of Income-tax, 23(1), Mumbai that has quoted many other decisions
Here is a decision that is against [2012] 24 taxmann.com 91 Assistant Commissioner of Income-tax-19(2) v. Jaimal K Shah that has quoted another Mumbai high court decision. I personally think it is on a different footing but as I mentioned please do seek professional opinion before finalising your sale.
Harsh Roongta is a CA and Sebi-registered investment advisor. Send your queries to personalfinance@dnaindia.net or tweet them to @AskHarshdna