Capital Gain Tax on Property : You know about Capital Gains Tax, how you will get its benefit. Somewhere you are not hearing this for the first time. If so, then we are going to tell you about Capital Gains Tax. Income Tax Law According to the Income Tax law, if you are selling your house, then you will have to pay tax. It comes under the purview of capital gains tax. The profit made on the sale of property is called capital gain. The profit made by selling this property is obtained by deducting the amount spent in buying the property and the expenditure on its repair.
have to pay tax
Capital gains arising from the sale of assets are liable to tax as per the holding period. Tax is to be paid on short term capital gains as per the income tax slab. If you sell the property for a holding period of less than 3 years, then the profits will be treated as short-term capital and tax will be paid on it.
how is tax
If you sell the property after 36 months from the date of acquisition, then long turn capital gains tax will have to be paid on the profits. With the benefit of indexation, the real estate attracts a cess of 3% plus long term capital gains tax at the rate of 20%. You will also have to pay tax on profits from the sale of gifted property.
how to save tax
After you bought the property, did you get any improvement or expansion done in it. Income tax exemption can be taken by deducting the index cost of this expenditure. This will reduce the burden of capital gains tax. The other way is that you can save tax under Section 54 of Income Tax by investing the profit amount in buying another house. This discount will be available on purchase of second ready-to-move house within 3 years of sale. You can also avoid capital gains tax even if there is an expenditure incurred in the sale of the property.