• Capital gain tax

I sold my property for 2 crore and purchased a 21 year old apartment worth 80 Lakhs Which had old mosaic damaged flooring ...etc
So I improved the apartment by doing civil work like new electrical line ... Plumbing line ... Plastering ... Water proofing for seepage issues and flooring worth 25 Lakhs now my question is I have all the bills for improving the apartment for comfortable livable condition for another 10 years ... Will I be able to deduct this amount from capital gain tax
Asked 4 months ago in Taxation from Chennai, Tamil Nadu
Gains from transfer of a capital asset being a house is computed by deducting the cost of acquisition of the asset, cost of improvement and any expenditure incurred wholly and exclusively in connection with the transfer from the sale consideration.

2) you would be entitled to claim expenditure incurred for improving the house 

3) you woukd need supporting documents to substantiate the cost incurred
Ajay Sethi
Advocate, Mumbai
23173 Answers
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Since you have detailed bill for each and every work carried out you woukd be in position to substantiate your claim that Rs 25 lakhs was spent by you 
Ajay Sethi
Advocate, Mumbai
23173 Answers
1217 Consultations
5.0 on 5.0
To prove cost of improvement you need evidence of cost of construction carried out 

Mere valuation report is not sufficent to prove cost of improvement 
Ajay Sethi
Advocate, Mumbai
23173 Answers
1217 Consultations
5.0 on 5.0
Under Section 54 – Any Long Term Capital Gain, arising to an Individual or HUF, from the Sale of a Residential Property (whether Self-Occupied or on Rent) shall be exempt to the extent such capital gains is invested in the
Purchase of another Residential Property within 1 year before or 2 years after the due date of transfer of the Property sold  and/or
Construction of Residential house Property within a period of 3 years from the date of transfer/sale of property.
Capital Gains shall be exempt to the extent it is invested in the purchase and/or construction of another house i.e.
If the entire amount is equal to or less than the cost of the new house, then the entire capital gain shall be exempt

In your case the expenses incurred for the renovation of the newly purchased house property shall be included in the cost of the property.
T Kalaiselvan
Advocate, Vellore
13969 Answers
127 Consultations
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I have done home improvement from the interior designer 
Done work like complete new electrical line
Carp entering work door and Windows changed additional grill for safety, bathroom fittings, change of flooring, changed plumbing lines and water proofing for seepage issues etc 
Payments done through online transfer 
Have detail bill for each and every work carried out 
Pictures of apartment while doing all these works 
Since it was a old building I've redone everything for my comfortable stay


The expenses incurred for all the repair works carried out for making the house fit for occupation can be included in the purchase cost of the property for claiming exemption, consult your auditor on further issues.
T Kalaiselvan
Advocate, Vellore
13969 Answers
127 Consultations
5.0 on 5.0
1) Do deduction is available even for designing work carried out for the invested apartment 

It should be shown as expenses incurred before occupying the house, which can be included in the cost of the property.






2) for the sold out property  I don't have any payment records for construction work carried out in1992 and 2002 by my mother,( in 2015 the house was gifted to me)  I got valuation report from the registered valuer of income tax dept 

This is irrelevant to the present subject.  You have sold the property to some value, so that becomes long term capital gains, now you concentrate for claiming exemptions for that.
T Kalaiselvan
Advocate, Vellore
13969 Answers
127 Consultations
5.0 on 5.0

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