look news india
Every person goes through thousands of questions before buying or selling a house. People also have many questions in their minds regarding the money received from selling the house. Will they be taxed or not, how much tax will be charged and if tax has to be imposed then how to save it. We try to answer these questions for you.
Know when capital gains tax will be imposed
If you are making profit by selling residential property then you will have to pay tax. According to Section 48 of the Income Tax Act, if a house is sold within two years of purchase, then income tax will have to be paid on the profit made on it. If you sell this house after owning it for more than 2 years, the profit is considered Long Term Capital Gain (LTCG). On this you will have to pay capital gains tax at the rate of 20 percent.
You will get a discount on buying a second house
According to Section 54 of the Income Tax Act, if you have sold your house and bought a new residential property, you can get exemption on long-term capital gains tax. This exemption will be available only to individual income taxpayers or Hindu Undivided Families (HUF). However, any property sold and bought should not be commercial. After selling the old house, you will have to buy a new house within 2 years. If you are building a house then exemption is available for 3 years. This exemption from long-term capital gains tax can be availed only on assets up to Rs 10 crore. If you buy two houses within 2 years, you can also avail the discount. However, your total long-term capital gains should not exceed Rs 2 crore.
Where else can you save money?
When adding up the profit made from selling a house, you will deduct the selling price and registration fees from the purchase price of that property. If you have spent money on property development, you can also deduct it from profit. Apart from this, expenses incurred on selling the house like brokerage and legal fees etc. are also deducted from the profit.