For Calculating The Long Term Capital Gains On Sale Of Property, The Fair Market Value Of The Property Needs To Be Ascertained As Per The Income Tax Act.
5% to 10% of the gross selling price: A capital loss cannot be used to reduce taxable income. Donor’s tax instead of capital gains tax?
So, The Concept Of Fair Market Value Is Important For Finding Out The Cost Of Acquisition, For Capital Gains Purposes.
According to the valuation officer, fair market value is the approximate price that any asset will fetch if sold in the open market on the valuation date. If an immovable property has been sold on / after 01st april 2017 then. Market valuation for tax purposes.
Ordinarily, It’s The Price At Which You Sell The Property That Will Be Used To Calculate Capital Gain And In Turn, Capital Gains Tax.
20% after taking benefit of indexation; Tax authorities across the world ensure that the transactions are realised at fair market value for the purpose of taxation. When you sell your own home, you may be subject to capital gains taxes, though things work a bit differently with real estate investments.
So If An Independent 3Rd Party Values The Property At $1M, And The Property Is Sold For $1M, Does That Mean, Because The Cost Basis Was Reset To The New Market Value, That There Is No Capital Gains Tax?
Fair market value cannot be substituted for full value of consideration in estimating the capital gains; Now the ito wants to tax the whole sum as long term capital gain without allowing any deduction as purchase value or cost price plus index cost. If an asset is sold for less than its basis, resulting in a capital loss, taxpayers may use that loss to offset capital gains.
3% Of The Net Price:
In each of these 3 scenarios the issue of capital gains tax arises. Likewise, if the price stated in the agreement is lower than the stamp duty valuation of the property, the stamp duty valuation of the property, which is a proxy for the fair market value, is taken as the sale consideration, instead of the value stated in the agreement. The rate is 6% capital gains tax based on the higher amount between the gross selling price or fair market value.