A” is owner of property. Land is 5 years old and building thereon is only 1 year old. The said property is being sold resulting in capital gain which will be long term for land & short term for building. What is the correct method to split the sale consideration to arrive at short term and long term gain.
Sale consideration is more than prevailing guideline value of both land and superstructure put together
Property Owner's Strategic Tax Split: Allocating Sale Proceeds Between Land and Building for Optimal Capital Gains Treatment A property owner seeks guidance on splitting sale consideration between land and building for capital gains tax purposes. The recommended approach involves allocating the sale price proportionally based on market or stamp duty values, distinguishing between long-term capital gains for land (over 5 years old) and short-term capital gains for building (1 year old). Proper allocation allows accurate tax calculation using respective asset holding periods and applicable tax rates. (AI Summary)
TaxTMI 
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