Property is an attractive investment option for long term gains. But you must pay the taxes.
If you’re selling property less than three years after acquisition, you are liable for short-term Capital Gains Tax. Selling after three years of acquisition, you’ll be liable for Long-term Capital Gains Tax. However, the Income Tax Act provides the following exemptions for LTCG Tax:
• Capital Gain Bonds in India:
You can invest a total of Rs. 50 lakh in the bonds of NHAI and REC to claim exemption under Section 54 EC. Investing in these gets you a 6% return. And, instead of your gains, only the interest earned on them is taxable at maturity.
•Investing in another property from the gains of the sale:
1.You must invest the gains from the property sale in a residential property within 2 years from sale.
2. Or, you can construct another house within a 3-year period, counting from 1 year before sale, and the gains should be invested in it.
The point to remember is that you should not own any house other than the one you are investing in to claim exemption under Section 54/54F.
•Capital Gain Account Scheme:
If you wouldn’t invest in Capital Gain Bonds or property, then you can temporarily put your funds in a CGAS account for up to 3 years and withdraw only for the purpose of property investment.
So, no more worrying about the taxman when you sell your property henceforth.
If you’re selling property less than three years after acquisition, you are liable for short-term Capital Gains Tax. Selling after three years of acquisition, you’ll be liable for Long-term Capital Gains Tax. However, the Income Tax Act provides the following exemptions for LTCG Tax:
• Capital Gain Bonds in India:
You can invest a total of Rs. 50 lakh in the bonds of NHAI and REC to claim exemption under Section 54 EC. Investing in these gets you a 6% return. And, instead of your gains, only the interest earned on them is taxable at maturity.
•Investing in another property from the gains of the sale:
1.You must invest the gains from the property sale in a residential property within 2 years from sale.
2. Or, you can construct another house within a 3-year period, counting from 1 year before sale, and the gains should be invested in it.
The point to remember is that you should not own any house other than the one you are investing in to claim exemption under Section 54/54F.
•Capital Gain Account Scheme:
If you wouldn’t invest in Capital Gain Bonds or property, then you can temporarily put your funds in a CGAS account for up to 3 years and withdraw only for the purpose of property investment.
So, no more worrying about the taxman when you sell your property henceforth.
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