Although it can be disappointing to sell a property at a loss, it has significant tax ramifications. So, if I sell my house for a loss what happens? A capital loss occurs when the purchase price of your property (including related expenses) exceeds the sale price. How this loss is addressed will depend on whether it is categorised as a short-term or long-term capital gain.
What Happens When You Sell Your House at a Loss?
A long-term capital loss (property held for more than two years) can only be deducted from long-term capital profits, and any unused loss can be carried forward for eight years.
A short-term capital loss (property sold within two years) provides more flexibility because it can be subtracted from both short-term and long-term capital earnings, with the residual amount being carried forward for eight years.
Importantly, losses from capital gains cannot be subtracted from salary, business expenses, or other revenue streams.
I hope this helps!
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A month ago, my brother acquired Rs. 40 lakh from the sale of a joint apartment that we owned. Since the flat was sold for less than the Rs. 40.50 lakh we paid for it 10 years ago, there is no capital gain. To understand what happens when you sell a property at a loss, I researched online. I found in India, a seller who sells a property at a loss may face various financial and tax consequences. I have shared those impacts below.
If I Sell My House for a Loss What Happens?
Here are a few consequences of selling property at a low price I came across.
The seller suffers a capital loss when a property is sold for less than the purchase price.
A loss from the sale of real estate that has been owned for longer than 24 months is referred to as a long-term capital loss (LTCL). You can only deduct LTCL from your property's Long-Term Capital Gains (LTCG) under the income tax regulations.
The seller's future investment choices and financial well-being may also be impacted by selling a property at a loss.
A loss on the sale of a property may be offset by capital gains from other assets acquired during the same fiscal year. However, precisely identifying the type of loss is necessary to be eligible for this offset.
I would suggest you go through the repercussions before selling your property at a low price.
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What Happens When You Sell a Property at a Loss?
Armaanm9
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2025-05-28T08:44:53+00:00 2025-05-28T08:44:54+00:00Comment
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