May 29, 2013 1:23 pm
I HAD BOUGHT A PROPERTY IN 2009 FOR 13,00,000. I WANT TO SELL THE SAME , AND EXPECTED PRICE I WILL GET IS ROUGHLY AROUND 24,00,000.
WHATS THE INCOME TAX I WILL BE PAYING FOR THE DEAL? AND HOW SHOULD I SAVE IT?
Does the 5 year duration for LTCG tax start from the possession date or the registration date?
Dear Bemoneyaware, just a smal correction, in case of property sell within 5Y on home loan, only the principal related benefits ‘ll be reversed not the Interest part.
Calculator for indexation benefits Capital Gain Calculator
You have to be careful if you have taken home-loan
Under the Income Tax Act, if you sell a house within three years of buying it, the tax benefits on the principal repayment and interest paid on the home loan are reversed .
You can claim tax exemption under Section 54 on the long-term capital gain on the sale of a house. To avail of this exemption, you must
Use the entire profit to either buy another house within two years or
Construct one in three years.
If you had already bought a second house within a year before selling the first one, you could still avail of the tax exemption,
For details you can read On Selling a house
Like most other earnings when you sell your house, you are liable to pay tax. As Real estate is regarded as an asset, so the profit from its sale is also assessed under the head ‘Capital gains’
For Real Estate the computation of capital gains are as follows:
If a property is sold within three years of buying it, it is treated as a short-term capital gain. This is added to the total income and taxed according to the slab rate.
If a property is sold after three years from the date of purchase, the profit is treated as a long-term capital gain and is taxed at 20% after indexation .
As you have held property for more than 3 years it will be a long term capital gain
Advantage associated with long-term capital gains is factoring of inflation while determining the profit by what is called as indexation . The indexation of purchase price helps to reduce the net capital gain, thereby slashing the tax burden for the seller
As indexation value CII is not available for FY 2013-14 let’s for calculation take if sale was made in 2012-13.
Investment Type:Real Estate
Time between :3 years 62 days
Gain Type: Long Term Capital Gain
Difference betweem sale and purchase price: 1100000
CII of the Purchase Year: 2009 month: Apr : 632
CII of the Sale Year: 2012 month: Jun : 852
Purchase Indexed Cost:1752531.65
Difference betweem sale and indexed purchase price: 647468.35
Long Term Capital Gain with indexation:129493.67
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