Capital Gains Tax On Property

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Two terms of capital gains

The sale of the capital asset leads to the capital gain simply considered as the profit. The sale of the capital is somehow a reference for revenue. Somehow based on the impending of the capital asset, according to that, there are two types of capital gain one is short term and the second one is long term. The capital gain suitable for the sale transaction or merger. The heritage property is not part of the capital gain. Therefore, some capital asset examples are for a capital gain, including jewellery, house property building, land, and other machinery.

capital gain

If you are a landowner and sell the property at a higher price than the original, you have to pay capital gain tax on the property’s sale with the profit you have earned. When you brought any property ten years bank, and now you wanted to sell the property. You will be going to get the money as you are liable for the capital gain tax. And due to the CAPITAL GAIN in the property you are having, you must have to pay the taxes. The rate and taxes will depend on the property will be categorized into two a short term and long-term capital gain on the tenure.


Tax Treatment

Holding Period Criteria FY2017-18 Onwards

Holding Period Criteria Upto FY2016-17

Tax Rate









Short Term Capital Gain Tax 

The short-term capital loan is stated to be the addition or transfer of the property which was with you till 24 months maximum or less than that will be considered. As you have to pay the tax on the short-term CAPITAL GAIN on the property as per the income tax slab. Some of the points for the short term capital gain are:

  • You have asked for some help from the broker, property dealer, or pay commission at the property sale. In this, you can negotiate the terms to reduce the money.
  • You can exclude the price due to the renovation or any other expenditure for the house.
  • Adjustment of the inflation rate s not applicable, that is, the indexation considered in small-term capital gain.
  • There will be no saving for the property you have owned, and there will be no exclusion, i.e. the re-investment in the property under section 54 or by NHAI or RECL purchasing the capital gains bond.
  • Liability for the short-term capital gains is considered very uplifted if you included a higher slab, so you should sell the property after the holding of 2 years to shift the category to the long-term capital goal.

Long Term Capital Gain

When the property you are having is the long term, based on the years, you have owned the, i.e. more than three years. The consideration for more than three years is said to be the long-term capital gain. The indexed cost and net sales are calculated between the difference of both for the property’s sales by the benefit of the indexation, which will help put off the inflation so the property’s real gain will be taxed. The points to the long-term capital gain.

  • 20% is the recent gain rate
  • In this, you can adjust the commission and the brokerage.
  • Any building and home maintenance expenses incurred during the time you held/owned the asset are deductible. Similar to the indexation gain available on the purchase price, house improvement according to the Reserve Bank of India’s Cost Inflation Index.
  • By investing in residential property or purchasing bonds issued by the government, you can get your long-term capital gains tax reduced or removed.

A property is a form of wealth constructed over a lifetime and usually sold to increase the current wealth, justifying a tax on it. Furthermore, capital gains tax has a strong effect on investment motivations. However, Indian income tax laws have clauses that exclude taxpayers from paying long-term capital gains tax under some cases.

Sell a residential property and invest the proceeds in a new residential property to qualify for a capital gains tax exemption under section 54.

Suppose you invest all or part of a residential property’s selling proceeds in India in another residential property in India. In that case, you can claim a capital gains tax exemption under section 54. The following are the exemption rules:

Individuals and HUFs are eligible for an exception for one residential house.

The capital gains from the selling of a residential property can cover the expense of a new home. The property should be sold and purchased in India.


How do I stop paying capital gains tax on my home?

You can escape capital gains tax on the property in several ways, including:

Using the proceeds from the sale of your former home to purchase or develop new residential land, you can assert an exception under Section 54F. You can even bring the money into the Capital Gains Account System. It’s a scheme that allows you to temporarily park your money while you look for the right property to invest in.

When a property is sold, how is capital gains tax calculated?

The long-term capital gain tax is determined by multiplying the capital gain amount by a 20% tax rate. Short-term capital gain tax on the land; on the other hand, is determined by adding the short-term capital gain in the individual’s gross income and taxing it at the appropriate slab rate.

How do I save money on my property’s capital gains?

Investing in another property will help you save capital gains on your current property. You can invest in up to two properties under section 54; before Budget 2019, the incentive was only valid for one. Second, you can use the proceeds from the sale to finance the development of a new property under section 54F.

What are the rules for capital gains tax exemption?

The following are three widely used capital gain exemption rules:

Section 54, where the investment is made in the purchasing of a new home.Section 54F, which provides for the purchase of new property or the development of the new property.

After I sell my house, where should I put my money?

After you sell your home, the best place to put your money is in another house. This could be your new home, or you could rent it out to make some money.

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