To calculate capital gains tax on house sale, you must first determine if the gain is short-term (STCG) or long-term (LTCG) based on the holding period. If the property was held for more than 24 months, the profit qualifies as LTCG and is taxed at 20% with indexation benefits. For properties sold within 24 months, STCG applies, and the gain is added to your income, taxed as per your slab rate.
How Much is Capital Gains Tax on a House?
The formula for LTCG calculation is:
Capital Gain = Sale Price - (Indexed Cost of Acquisition + Indexed Improvement Cost + Transfer Expenses). The indexed cost adjusts the purchase price for inflation using the Cost Inflation Index (CII).
For example, if you bought a house in 2010-11 (CII: 167) for Rs. 30 lakh and sold it in 2023-24 (CII: 348) for Rs. 1 crore, the indexed cost = Rs. 30 lakh × (348/167) = Rs. 62.51 lakh. Deducting this from the sale price gives the taxable gain.
Exemptions like:
Section 54 allows reinvesting LTCG in a new residential property to avoid tax, provided the new house is bought 1 year before or 2 years after the sale, or constructed within 3 years.
Alternatively, Section 54EC permits investing in specified bonds within 6 months (up to Rs50 lakh) for tax deferral.
Proper documentation and timely compliance are crucial to claim these benefits.
Get Assistance with Your Tax Payments & Assessment from Experts at NoBrokerRead more:
How to calculate capital gain tax on joint development agreement?
Your Feedback Matters! How was this Answer?
Shifting, House?
✔
Lowest Price Quote✔
Safe Relocation✔
Professional Labour✔
Timely Pickup & Delivery
Intercity Shifting-Upto 25% Off
Check Prices
Intracity Shifting-Upto 25% Off
Check Prices
City Tempo-Upto 50% Off
Book Now
How to Calculate Capital Gains Tax on House Sale?
sia
57 Views
1
6 months
2025-05-24T06:27:15+00:00 2025-05-24T06:27:17+00:00Comment
Share