## Calculation of indexed cost of property

29 Jun 2016 Now get capital gain calculation easily and you can even consult experts at TaxRaahi. Capital asset means any property whether movable or not. Indexed cost: indexation is a Indexation is a technique to adjust tax  Indexed cost of acquisition: (Purchase cost/CII of the year of purchase)*CII of the year of sale. Applying the formula in the example, the indexed cost of acquisition comes out to be (1000000/113)*272 = Rs 24,07,079/-This is the cost which is to be used to calculate the Capital gain and tax on the profit made.

Indexed cost of acquisition: (Purchase cost/CII of the year of purchase)*CII of the year of sale. Applying the formula in the example, the indexed cost of acquisition comes out to be (1000000/113)*272 = Rs 24,07,079/-This is the cost which is to be used to calculate the Capital gain and tax on the profit made. If the property was held for more than three years at the time of transfer, then the gains are considered as long-term capital gains (LTCG). It is taxed at 20% with indexation. To calculate LTCG from the property, the seller has to calculate the indexed cost of acquisition. Then calculate the index cost of the property as per chart and example above. Then calculate Capital Gain = Sale value – Indexed cost . As it is owned by 7 people, then you will need to divide the capital gain by 7 for each person. For the purpose of computing long term capital gains, the property seller has to calculate the indexed cost of purchasing the property. To assess the indexed cost, the seller needs to multiply the property's cost of acquisition with the cost inflation index, as notified by the tax authorities for the year of transfer. This figure then has to be divided by the cost inflation index of the year of purchase. Then the cost inflation index value for each year is declared by the government considering the inflation in the country. The value for FY 2018-19 and AY 2019-20 is 280. This index is useful in arriving at the indexed cost of a capital asset like property, mutual funds etc. Old Cost Inflation Index Some people may assume that the capital gain on the sale of this property would be 105 lakh (selling price - purchase price). This works out to a 70 lakh. Actually the calculation above is not correct. While deducting the purchase price of 35 Lakh, from the sale price of 105 Lakh,

## How to calculate Fair Market Value of the Property. There is no fixed formula

2 Dec 2015 For Example: If someone purchased a property in year 2004 for 30 lakhs. In order to calculate Indexed cost of purchase following information  As the property was purchased prior to 30 September 1999, each element of the cost base must be indexed. The indexation factor is 1.012. The indexation factor  29 Jun 2016 Now get capital gain calculation easily and you can even consult experts at TaxRaahi. Capital asset means any property whether movable or not. Indexed cost: indexation is a Indexation is a technique to adjust tax  Indexed cost of acquisition: (Purchase cost/CII of the year of purchase)*CII of the year of sale. Applying the formula in the example, the indexed cost of acquisition comes out to be (1000000/113)*272 = Rs 24,07,079/-This is the cost which is to be used to calculate the Capital gain and tax on the profit made.

### Then the cost inflation index value for each year is declared by the government considering the inflation in the country. The value for FY 2018-19 and AY 2019-20 is 280. This index is useful in arriving at the indexed cost of a capital asset like property, mutual funds etc. Old Cost Inflation Index

29 Jun 2016 Now get capital gain calculation easily and you can even consult experts at TaxRaahi. Capital asset means any property whether movable or not. Indexed cost: indexation is a Indexation is a technique to adjust tax  Indexed cost of acquisition: (Purchase cost/CII of the year of purchase)*CII of the year of sale. Applying the formula in the example, the indexed cost of acquisition comes out to be (1000000/113)*272 = Rs 24,07,079/-This is the cost which is to be used to calculate the Capital gain and tax on the profit made. If the property was held for more than three years at the time of transfer, then the gains are considered as long-term capital gains (LTCG). It is taxed at 20% with indexation. To calculate LTCG from the property, the seller has to calculate the indexed cost of acquisition. Then calculate the index cost of the property as per chart and example above. Then calculate Capital Gain = Sale value – Indexed cost . As it is owned by 7 people, then you will need to divide the capital gain by 7 for each person. For the purpose of computing long term capital gains, the property seller has to calculate the indexed cost of purchasing the property. To assess the indexed cost, the seller needs to multiply the property's cost of acquisition with the cost inflation index, as notified by the tax authorities for the year of transfer. This figure then has to be divided by the cost inflation index of the year of purchase.

### In case the Asset sold / transferred is a residential house, and if out of the capital gains, a new residential house is constructed within 3 years, or purchased 1 year

Calculate Indexed Cost and LTCG upto 31.03.2017, Indexed Cost of Aquisition, Indexed Cost of Improvement for Long Term Assets, Exemption u/s 54 / 54F. Immovable property (e.g., buildings) Step 3: Calculate the Indexed Home Improvement Cost: This can be calculated by multiplying the home improvement costs, which amounts to Rs 5,00,000 with the indexation factor of 1.52. Therefore the Indexed Home Improvement Cost is 5,00,000 X 1.52 = 7,60,000. CII number is used to compute the inflation-adjusted purchase cost of an asset in order to calculate LTCG on it when it is sold. The Finance Ministry has notified 280 as the cost inflation index (CII) number for the Financial Year (FY) 2018-19. The purchase price of the asset is indexed by the cost inflation index. The formula to calculate the cost inflation index is as follows: Cost Inflation Index (CII) = CII for the year the asset was transferred or sold / CII for the year the asset was acquired or bought

## Once you have calculated the indexed cost of property acquisition and know the selling price, you can calculate LTCG by deducting indexed cost of property acquisition from the selling price. Say, you plan to sell a house that was bought in May 2011 for Rs50 lakh, and which is worth Rs80 lakh now.

Indexed cost of acquisition: (Purchase cost/CII of the year of purchase)*CII of the year of sale. Applying the formula in the example, the indexed cost of acquisition comes out to be (1000000/113)*272 = Rs 24,07,079/-This is the cost which is to be used to calculate the Capital gain and tax on the profit made. If the property was held for more than three years at the time of transfer, then the gains are considered as long-term capital gains (LTCG). It is taxed at 20% with indexation. To calculate LTCG from the property, the seller has to calculate the indexed cost of acquisition. Then calculate the index cost of the property as per chart and example above. Then calculate Capital Gain = Sale value – Indexed cost . As it is owned by 7 people, then you will need to divide the capital gain by 7 for each person.

Calculate Indexed Cost and LTCG upto 31.03.2017, Indexed Cost of Aquisition, Indexed Cost of Improvement for Long Term Assets, Exemption u/s 54 / 54F.