Property capital gains tax is a tax levied on the proceeds from the sale of an asset. The difference between the selling price and the acquisition cost is referred to as a capital gain when you sell a property for more than you paid for it. But do you know how to avoid paying capital gains tax on investment property? If not, I have shared a few tips for you below.
Tips for Saving Taxes on Investment Property
In India, you can legally avoid or reduce capital gains tax on the sale of an investment property by strategically reinvesting the proceeds under specific sections of the Income Tax Act. Here are a few tips you can follow to save your taxes on investment property.
The most common method is Section 54. It allows exemption on long-term capital gains (LTCG) if you reinvest the profit in purchasing or constructing another residential property within specified timelines. You must buy the new property one year before or two years after the sale, or complete construction within three years to qualify.
Another option is Section 54EC, where you can invest the capital gains in government-approved bonds (like NHAI or REC) within six months of the sale. The maximum investment limit is Rs 50 lakh per financial year, and these bonds have a five-year lock-in period.
For those not buying another property, Section 54F offers tax exemption if the entire sale proceeds (not just gains) are used to buy or construct a residential house, provided you don’t own more than one house (excluding the sold property) at the time of sale.
I hope you found this helpful.
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How to Avoid Paying Capital Gains Tax on Investment Property?
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2025-05-24T06:28:45+00:00 2025-05-24T06:28:48+00:00Comment
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