Capital Gains After Selling a Property

By Sandeep Sadh
December 10, 2023

The rules of capital gains investments after selling a property vary based on the location and the specific circumstances of the sale. However, there are some general principles that apply in most cases:

Capital Gains Tax:

Selling a property generally triggers capital gains tax, which is calculated on the difference between the sale proceeds and the cost of acquisition (purchase price + improvement costs).
The tax rate varies depending on the holding period of the property and whether it is classified as long-term or short-term capital gains.

Long-Term Capital Gains:

These apply to properties held for more than a specific period (typically 24 months in India).
They are generally taxed at a lower rate than short-term capital gains.

Short-Term Capital Gains:

These apply to properties held for less than the specified period.
They are taxed at a higher rate than long-term capital gains.

Exemptions:

Certain exemptions may be available to reduce or eliminate capital gains tax, such as:
- Investment in residential property: Reinvesting the capital gains in a new residential property within specified timelines can exempt the tax.
- Capital Gains Account Scheme (CGAS): This scheme allows you to deposit the capital gains in a notified bank account and invest them in specific instruments within a specific period to claim exemption.
- Other exemptions: There may be additional exemptions based on specific situations, such as agricultural land, inheritance, etc.

Reporting and Payment:

You are required to report capital gains from property sales in your income tax return and pay the applicable tax.
Deadlines for reporting and payment vary depending on the location and tax regulations.

Additional Considerations:

Indexation: The cost of acquisition is adjusted for inflation for calculating the capital gains, reducing the tax burden.
Depreciation: Depreciation on the property can be deducted from the capital gains for tax purposes.
Professional advice: Consulting a tax advisor is recommended to understand the specific tax implications and optimize your tax liability.

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About the author

Sandeep Sadh

About Sandeep Sadh

Sandeep Sadh has been in the real estate business since 1993 in Mumbai. He has expertise in Buying, Selling, Leasing properties in Mumbai and a deep understanding of legal and tax related matters due to his experience.

Summary

Over the years, he has experienced the City's growth. He has been a columnist in the Times of India with numerous articles, which bring about a clear picture of the real estate market in Mumbai. He is a regular on NDTV, CNBC, ET Now Real Estate and Zee News, giving his experienced quotes as and when required.

Builders jack up rates with market handle - The Indian Express
REALTY PLUS ORGANIZES THREE OF ITS FLAGSHIP EVENTS AT HOTEL TAJ SANTACRUZ MUMBAI - Exchange 4 Media/Realty Plus
Need'nt hurry yet to buy that new flat - The Indian Express
More luxury homes than city needs - The Indian Express
Don't wait to buy a home; prices won't drop - Rediff
Make real estate deals more transparent - Money Control
Real estate market could recover by Diwali - The Economic Times
Energy-efficient buildings increase return on your realty investment - The Economic Times
Should you buy property in a religious location? - The Economic Times
Are you paying a higher maintenance bill for housing society? - The Economic Times
Developers Are Rolling Out Offers. Homebuyers, Read The Fine Print Carefully - Bloomberg/Quint
Hot property destinations of 2007 - Rediff
Piramal's big bet - Business Today
Are you buying a 'safe' house? - Magicbricks

Sandeep Sadh has used information and technology since the year 1998 and now what people call it Prop Tech to cater to the needs of Home Buyer, Seller, Investor and Corporates, HNI and NRI looking to Buy/Sell or Lease their properties in the Mumbai Property Market.

Sandeep has a holistic experience of real estate be it Leasing an Apartment for your CEO in the most upmarket buildings, to enter into a long lease for your office in Mumbai in prime buildings or an Investment in good projects with a detailed analysis keeping in mind the Demand and Supply and other micro factors of the project/property.

Sandeep Sadh has developed a few websites like www.mumbaipropertyexchange.com, www.realestatemumbai.com, www.propi.in which augment the real estate consulting business.

Right from Investments in Primary Markets to Selling, leasing and specializing for NRI’s all over the world. He is an expert in NRI Home Buying and Selling and has a good understanding of the Income Tax laws pertaining to Selling a Property and Repatriating funds overseas or reinvesting based on Capital Gains etc.

Experience

Residential Leasing
Commercial Leasing
Residential Home Buying
Commercial Property Buying
Investment Properties with complete Property Management as your Real Estate Family office

While transacting in the above segments, he has complete experience and deep understanding of the paper work, his areas of expertise are :

Drafting of the Leave and License Agreements
MOU for Buying/Selling Properties
Drafting Agreement for Sale
Gift Deeds
Computing of Capital Gains with current ready reckoner values
Drafting of Supporting Power of Attorney.

As an add on Service, Sandeep Sadh has tied up with various Professionals like Lawyers and Chartered Accountants who add value in transacting and specially services for Non Resident Indians.

Application to Income Tax for Lower Tax Deduction Certificate – Through a qualified CA and keeping a grip on the traction so that the remittance back to Non Resident Indians after Selling the property is seamlessly transferred.

You can connect with Sandeep Sadh on ssadh@mumbaipropertyexchange.com

LinkedIn - https://www.linkedin.com/in/sandeepsadhmpe/

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Capital Gains After Selling a Property