Tax on sale of property that is purchased via loan
7 months ago
I purchased a residential plot on loan and the total net price excluding registration charges and loan interest was 22.5 lac, If i add the interest i paid on loan then total becomes 27 lac, i recently sold that plot on 30 lac, i was holding that plot for more than 2 years after loan is settled. My loan tenure was 5 years.
Will i be require to pay any tax
A.Dear Client,
The sale of a residential plot can have tax implications in terms of capital gains tax in India. Capital gains are categorized as either short-term or long-term based on the holding period of the asset. In your case, you mentioned that you held the plot for more than 2 years after the loan was settled. This implies that the gains will be treated as long-term capital gains (LTCG).
Here's how the taxation would work:
Long-Term Capital Gains (LTCG): If you held the residential plot for more than 2 years, any gains from the sale will be considered as LTCG. LTCG on the sale of a residential property is typically taxed at a special rate, and you are eligible for certain exemptions and deductions.
Tax Calculation: To calculate your LTCG tax liability, you'll need to follow these steps:
a. Determine the LTCG by subtracting the indexed cost of acquisition from the selling price. The indexed cost is adjusted for inflation using the Cost Inflation Index (CII) published by the government.
b. Apply the LTCG tax rate, which is currently 20% with indexation benefit (as of my knowledge cutoff date in September 2021). Please check the latest tax rates as they may change.
Exemptions and Deductions: You may be eligible for certain exemptions or deductions that can reduce your LTCG tax liability, such as:
a. Section 54: If you intend to reinvest the LTCG amount in another residential property in India within a specified period (usually 2 years) from the date of sale, you can claim an exemption under Section 54 of the Income Tax Act.
b. Section 54F: If you do not intend to reinvest in another residential property but wish to invest the LTCG in specified assets like bonds or another property, you may be eligible for an exemption under Section 54F.
It's crucial to consult with a qualified tax professional or chartered accountant who is up to date with the latest tax regulations to accurately calculate your LTCG tax liability and explore any available exemptions or deductions that you may qualify for. Additionally, tax laws may change over time, so it's essential to verify the current tax rates and rules applicable at the time of your property sale.
Thank you.
The sale of a residential plot can have tax implications in terms of capital gains tax in India. Capital gains are categorized as either short-term or long-term based on the holding period of the asset. In your case, you mentioned that you held the plot for more than 2 years after the loan was settled. This implies that the gains will be treated as long-term capital gains (LTCG).
Here's how the taxation would work:
Long-Term Capital Gains (LTCG): If you held the residential plot for more than 2 years, any gains from the sale will be considered as LTCG. LTCG on the sale of a residential property is typically taxed at a special rate, and you are eligible for certain exemptions and deductions.
Tax Calculation: To calculate your LTCG tax liability, you'll need to follow these steps:
a. Determine the LTCG by subtracting the indexed cost of acquisition from the selling price. The indexed cost is adjusted for inflation using the Cost Inflation Index (CII) published by the government.
b. Apply the LTCG tax rate, which is currently 20% with indexation benefit (as of my knowledge cutoff date in September 2021). Please check the latest tax rates as they may change.
Exemptions and Deductions: You may be eligible for certain exemptions or deductions that can reduce your LTCG tax liability, such as:
a. Section 54: If you intend to reinvest the LTCG amount in another residential property in India within a specified period (usually 2 years) from the date of sale, you can claim an exemption under Section 54 of the Income Tax Act.
b. Section 54F: If you do not intend to reinvest in another residential property but wish to invest the LTCG in specified assets like bonds or another property, you may be eligible for an exemption under Section 54F.
It's crucial to consult with a qualified tax professional or chartered accountant who is up to date with the latest tax regulations to accurately calculate your LTCG tax liability and explore any available exemptions or deductions that you may qualify for. Additionally, tax laws may change over time, so it's essential to verify the current tax rates and rules applicable at the time of your property sale.
Thank you.
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A.Dear sir,
Your question related to finance and tax matter as such you may please contact any chartered accountant or auditor.
Your question related to finance and tax matter as such you may please contact any chartered accountant or auditor.
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