WE help you compute the amount of tax you need to cough up, when selling your property.
I inherited a property jointly, along with other members of my family. Now, all of us want to sell it. The property was constructed in 1937 and will be sold in April 2008. My share of the sale is Rs 20 lakh (Rs 20,00,000) What will be the tax on this? I do not have the cost of acquisition figure.
-- Anirudh K
In case of jointly owned properties, the capital gains is computed for the property as a whole and then the same is allocated among the co-owners based on their share in the property. To compute capital gains, categorise the asset sold, into a short-term capital asset or a long-term one.
Smart tip: In case of immovable property, if it's held for more than 36 months, it's considered to be a long-term capital asset. If it is held for 36 months or less, it is considered as a short-term capital asset. For this purpose, in case of inherited assets, the period for which the earlier owner held the said asset is also to be taken into consideration.
In your case, since the property was constructed in 1937 and presuming that it was constructed by your father, grandfather or relative from whom you and your other relatives inherited it, the property will be considered as a long term capital asset.
| Computing capital gains You can compute the long-term capital gains on sale of the long-term capital asset using this formula: Sale Price less Indexed Cost of Acquisition or Improvement |
Smart tip: You arrive at the Indexed Cost of Acquisition or Improvement after taking benefit of the Cost Inflation Index that is notified by the Government from year to year. This is meant to give the benefit of inflation to the tax payer.
Read: Post TDS, there's more tax the pay!
Photograph: Toby Canham/Getty
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