If you sell a capital asset you are bound either gain or suffer loss. Basically a capital asset includes property, cars, stocks, bonds, etc. So when you sell a capital asset and earn money out of it, you earn capital gain. There are two types of capital gains, LTCG or long term capital gain and STCG or short term capital gains. Let us understand answer to you query how to calculate LTCG on sale of property.
Factors considered to calculate long term capital gain on propertyThe calculation of long term capital gain depends on various factors such as initial value of the property, expenses incurred wholly or exclusively on the property, indexed cost of acquisition, indexed cost of improvement, expenses incurred during sale proceeds.
How to calculate LTCG on sale of property?The formula to calculate LTCG on sale of property is
Long-term capital gain = Selling Price – Indexed costLet us understand how to calculate LTCG on sale of property with the help of an example:
If you bought a commercial land for Rs.30,00,000 in the year 2005 and after 10 years you sold it for Rs. 70,00,000.
CII= Index for financial year 2014-15/ Index for financial year 2005-2006
CII= 1024/480
CII= 2.13
Indexed cost of purchase = CII x Purchase Price = 2.13 x 30,00,000 = Rs. 63,90,000
Therefore, Long term capital gain = Selling Price – Indexed cost
LTCG = 70,00,000 – 63,90,000
LTCG = Rs. 6,10,000
This is how
calculation of long term capital gain on sale of property is done.
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Authors Of The Question
How to calculate LTCG on sale of property?
Naresh
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3 Year
2021-09-15T12:02:05+00:00 2021-09-15T17:49:03+00:00Comment
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