Question ID : 40728

Capital gain

A Father has transferred his residential cum commercial property to his son in 2005 when the collector rate was Rs 8 Lacs . Now son has sold this property in 2019-20 for Rs 9 Lacs How capital gain will be calculated. Further as the son who is the coowner of a plot with his wife (this plot was purchased four years back) . Son has constructed house on this plot whuch is completed in 2019-20 Whether one half of this construction cost will be treated as investment in new house by son

Answer ID : 80632

As per Section 49 Cost of the asset for Calculating of Capital gain should be the date on which his father purchased the property and then indexation should be done. Yes, he can use 1/2 construction cost for taking exemption.

Answer ID : 80636

1. Capital gain attracts on sale of Residential cum commercial property. 2. Whether reinvestment in one half portion of the construction cost is eligible for deduction under section 54 is a vexed issue because, deduction is permitted on the capital gains of "property used for residence". Alternatively, reinvestment ie., construction of new house should be after the date of sale of property received from father.

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