Conversion of leasehold land to freehold

[Sanjiv Chatterjee]

A family held a pece of land on leasehold basis for the last 90 years and also constructed 2 houses on it & used it for residential purposes. It plans to convert the land to freehold and sell it immediately.

Query is:

1. Will this be sale of a long term asset or short term?

2. Will the conversion fees tantamount to cost of improvement?

3. How is the leasehold land to be valued?

[CAGOPALJI AGRAWAL]

Before replying your query, it would be advisable to through the lease deed first. Generally, the freehold charges would be capitalised. The long /short term status would be ascetained from the date of vesting of interest in the property.