Long-term gains from property sale | Value Research Long-term capital gains from the sale of real estate attract tax at a rate of 20 per cent with indexation
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Long-term gains from property sale

Long-term capital gains from the sale of real estate attract tax at a rate of 20 per cent with indexation

I have bought a flat in Thane in April 2011 for ₹18 lakh on a housing loan (SBI Max-gain - RoI 9.85% Floating) for which current outstanding is ₹13 lakh. I have bought another flat in Pune in November 2014 on another housing loan of 35 Lakhs (PNBHFL, RoI 10% Floating) where I am currently residing with my family. (Note: all above dates & prices are as per Index-2 record)
I am the sole earner of my family. I am planning to sell the Thane flat for approximately ₹40 lakh in Jan 2016 and use the money to repay my home loan and reduce my liability. I am currently earning a net salary of ₹11 lakh.
Will I have to pay Capital gain tax? If yes, how much?
What should I do to avoid Capital gain tax? Can I avoid it by selling early or later?
What is the lock in period if I invest sale proceeds into an Infra Fund to avoid capital gains tax?

- Shailendra Mane

You will have to pay long term capital gains tax at a rate of 20 per cent with indexation benefit. Investments held over three years qualify for long term capital gains tax. Your tax liability works out roughly around ₹2.5 lakh.

You can save taxes if you invest the money in capital gains bonds specified under Section 54EC within six months of the sale of your house. These bonds have a lock-in period of three years.

Long term capital gains from property sale is also exempted if the proceeds are used to buy a residential property within two years or on construction of residential property within three years from the date of acquisition. The exemption would be equal to the actual amount utilised for the purchase or construction of the residential property.


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