Property is considered a short-term capital asset when held for up to 3 years (i.e. 36 months or less). If held for more than 3 years, it is considered a long-term capital asset. So tax implications depend on the duration for which you own an asset. Let me tell you that how to save tax on sale of property.
How to save tax after selling property
Set Off Every Capital Loss
It allows you to set off every capital profit or gain against the capital losses you incurred before. It is analogous to the same year adjustment of capital gains and capital loss. I want you to know that you can set off a long-term capital loss against the long-term capital gain along with the condition to carry forward every capital loss for eight consequent years. Besides this, you are required to file the income tax return before your income tax return filing closing date to carry forward all your capital loss.
Invest in Capital Gains Account Scheme (CGAS)
The CGAS scheme offers a huge relief to the taxpayers. You can invest in this scheme for 3 years, and during this period, you can use the capital gains for purchasing or constructing a residential home on your property. The deposit in the CGAS account must be made before registering or filing an income tax return, and then this investment in the CGAS must be mentioned in the income tax return. This is how to save on taxes when selling a house.
Invest in Bonds
Investment in some financial assets allows you to save your laboriously earned capital gains as these LTCG are exempted under the Indian Income Tax Act, 1961 (Section 54EC). You are required to invest the sum earned in bonds within six months of the transfer of the sum and realization of gains if you want to get this tax exemption on your capital gains. Plus, you have to invest funds in these bonds for a minimum of 3 years as a lock-in period.
I hope you like my answer on how to save tax from sale of property.
Read more:
How to save tax on sale of agricultural land
Is basic exemption limit available for long term capital gain?
How to calculate long term capital gain on property?
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How to save tax on sale of property?
Shweta
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2021-10-04T17:17:41+00:00 2021-10-04T17:54:36+00:00Comment
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