Capital Gain Tax On Sale of Residential Property
Residential Property: Capital Gain Tax

How to save capital gain tax on sale of residential property

Before striving to understand capital gain, let us be very clear about the taxes that will be levied on such gains. You will have to pay 20% of the sale amount in the assessment year. To put it in simple terms, you have to pay four lakh rupees towards capital gain tax if you gained twenty lakh rupees from selling your property.

This and more information and great practical methods to save capital gain tax received from the sale of residential properties has been obtained from a pioneer company specialized in capital gain tax.

Are Sales of All Residential Properties Counted Towards Capital Gain Tax?

The seller has to pay tax only on those properties which he or she was in possession for more that 24 calendar months. 

A Common Practice Employed to Save Capital Gain Tax

Section 54 and 54F of the income tax act details out a way to claim exemption. The person who gained from the sale of the residential property should invest the amount in another residential property. The invested amount will be exempt from capital gain tax. 

The hardest part of assessing yourself for the financial year and the subsequent filing is the labyrinth of rules and regulations. A seasoned capital gains accounting company will do the e-filing on your behalf without the usual hassles. The easiest part is that you do not even have to visit their offices. Your personal tax advisor is just a click or a phone call away.

100% Exemption Through Re-Investing

If you plan to reinvest the whole amount, it should make you eligible for 100% exemption for the particular sale. That is not the case. Rs. 2 crores is the maximum amount that will be exempt from capital gain tax due to reinvestment in another residential property. It can be explained in the below example. Leela sold her house for Rs. four crores. She bought another house for Rs. Three crores. She has only Rs. One crore with her and the remaining three has been reinvested. However, she has to pay tax for two crores and not one crore. 

Repeat Sales and Investments

This is a feature that can be used by an individual only once in a life time.

A proper and legal method to get you exemptions from capital gain tax on sale of residential properties is best understood by an expert in the matter. There is more legality similar to the point explained in this paragraph with this regards. Always make sure to consult a professional and trustworthy company before taking steps about the capital gain tax due to the sale of your property.

How Much Will a Tax Consultant Charge for Filing My Returns?

That is the best part of getting capital gain tax matters done through a professional and trustworthy institution. Believe it or not, good companies have packages as low as Rs. 2, 999 to get you through your capital gain taxation. 

Drafted By:
CS.A.Maniraj.,B.Com.,ACS.,CA(Fin), Independent Director 
Certified CSR Professional., Certified GST Professional.

Capital Gain Tax On Sale of Residential Property
Maniraj Anantham 1 March, 2024
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