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According to RBI\u2019s report titled, \u201cThe Indian Household Finance Landscape\u201d in September 2017, 76.9% of household wealth in India is invested in real estate. 59% of the poorest 20% in the country own a dwelling unit of some kind or land. Thus, while selling your property, you will receive a sizeable amount which will in turn be subject to taxes. Understanding the nuances of capital gains will ensure that you optimise on taxes in the event of the sale of the property.<\/p>\n\n\n\n
There are 2 types of capital gains taxation:<\/p>\n\n\n\n
If the property is sold within a period of 36 months, then you will be liable for short-term capital gains. The gain which is the difference between the sale and buy value will be added back to the income and the same will be taxed at marginal tax rates.<\/p>\n\n\n\n
The same can be as high as 30% + cess + surcharge for someone earning above Rs. 10 Lakh a year.<\/em><\/p>\n\n\n\n If the property is sold after 36 months, the profit is treated as long-term capital gains and can be taxed at 20% after indexation.<\/p>\n\n\n\n Indexation adjusts for inflation during the holding period, the purchase price is adjusted to reduce the tax burden on the seller.<\/em><\/p>\n\n\n\n The seller, in the event of long-term capital gains, can claim expenses incurred on repairs and renovations can be added to the purchase cost while computing long-term capital gains. The interest paid under the pre-construction period can be added back to the cost. This benefit remains unavailable for short-term capital gains.<\/p>\n\n\n\n Additional Read \u2013 Writing a Will. Why Is It an Important Part of Your Financial Wellbeing?<\/a><\/p>\n\n\n\n <\/p>\n\n\n\nLong-Term Capital Gain On Property Taxation<\/strong><\/h3>\n\n\n\n
LTCG and STCG Rates in 2023-24 and 2024-25 – Comparison<\/strong><\/h2>\n\n\n\n
Product<\/strong><\/td> Before<\/strong><\/td> After<\/strong><\/td><\/tr> <\/td> Period of holding<\/td> Short Term<\/td> Long Term<\/td> Period of holding<\/td> Short Term<\/td> Long Term<\/td><\/tr> Equity-oriented MF units<\/td> More than 12 months<\/td> 15.00%<\/td> 10.00%<\/td> More than 12 months<\/td> 20.00%<\/td> 12.50%<\/td><\/tr> Specified Mutual funds which have more than 65% in debt<\/td> More than 36 months<\/td> Slab rate<\/td> Slab rate<\/td> More than 24 months<\/td> Slab rate<\/td> Slab rate<\/td><\/tr> Equity FoFs<\/td> More than 36 months<\/td> Slab rate<\/td> Slab rate<\/td> More than 24 months<\/td> Slab rate<\/td> 12.5%<\/td><\/tr> Overseas FoF<\/td> More than 36 months<\/td> Slab rate<\/td> Slab rate<\/td> More than 24 months<\/td> Slab rate<\/td> 12.5%<\/td><\/tr> Gold Mutual Funds<\/td> More than 36 months<\/td> Slab rate<\/td> Slab rate <\/td> More than 24 months<\/td> Slab rate<\/td> 12.5%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n How to Calculate Capital Gain on Property?<\/strong><\/h2>\n\n\n\n