ITR Filing for Property Sale (Capital Gains)

Overview

Selling a property creates a tax event even when you have made no profit worth celebrating. The sale has to appear in your income tax return for that year, with the capital gain or loss worked out and any exemption claimed. Not reporting a sale is a common reason for notices, since property registrations are reported to the tax department and the TDS deducted by the buyer shows up in your tax credit statement and AIS.

The gain is the sale price minus the cost of acquisition, the cost of improvements and the expenses of the sale such as brokerage and legal fees. Whether the gain is short-term or long-term depends on how long you held the property, and the tax rate and method of calculation differ. For property bought before certain dates, the rules on indexation and the choice of method have changed, so last year's way of calculating may not apply this year. Inherited property uses the previous owner's cost and holding period, which many sellers do not know.

We compute the capital gain, apply any exemption you are eligible for, report the transaction in the right schedule of the return and file it. Tell us early if you want to claim an exemption by reinvesting, as the deadline to invest can fall before the return is due. We also cross-check the TDS credit so that what the buyer deducted actually shows up against your PAN. Keep your sale deed, purchase deed, improvement bills and registration receipts ready.