How can I avoid tax on property sale in India?

How do I avoid paying taxes when I sell my house?

How Do I Avoid Paying Taxes When I Sell My House?

  1. Offset your capital gains with capital losses. …
  2. Consider using the IRS primary residence exclusion. …
  3. Also, under a 1031 exchange, you can roll the proceeds from the sale of a rental or investment property into a like investment within 180 days.

How much tax do I pay on sale of property in India?

Long term Capital Gains on sale of real estate are taxed at 20%, plus a cess of 3%, if the sale fulfils certain conditions. If you sell a property that was gifted to you, or that you have inherited, you will still be liable to pay capital gains tax on it.

Do I need to pay tax if I sell my property in India?

If a property is sold within three years of buying it, any profit from the transaction is treated as a short-term capital gain. … If you sell after three years, the profit is treated as long-term capital gains and taxed at 20% after indexation.

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How can I reduce capital gains tax on property sale?

How to avoid capital gains tax on a home sale

  1. Live in the house for at least two years. The two years don’t need to be consecutive, but house-flippers should beware. …
  2. See whether you qualify for an exception. …
  3. Keep the receipts for your home improvements.

What is the 2 out of 5 year rule?

The 2-out-of-five-year rule is a rule that states that you must have lived in your home for a minimum of two out of the last five years before the date of sale. However, these two years don’t have to be consecutive and you don’t have to live there on the date of the sale.

Do I have to pay income tax when I sell my house?

Typically, when you sell an asset you must pay capital gains tax (CGT) on any profit made on the sale. For most of us, the most valuable asset we own is our family home . … The tax law provides an automatic exemption for any capital gain (or loss) that arises from the sale of a taxpayer’s main residence.

How is tax calculated on property sale?

Illustrative Example for Long Term Capital Gain Tax on Sale of a House

  1. Step 1: Calculate the Indexation Factor: …
  2. Step 2: Calculate the Indexed Acquisition Cost: …
  3. Step 3: Calculate the Indexed Home Improvement Cost: …
  4. Step 4: Calculate the Long Term Capital Gain on the sale of the house:

How is tax calculated on sale of property?

In case of short-term capital gain, capital gain = final sale price – (the cost of acquisition + house improvement cost + transfer cost). In case of long-term capital gain, capital gain = final sale price – (transfer cost + indexed acquisition cost + indexed house improvement cost).

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Who pays the tax on sale of property?

TDS on Property is required to be paid by all taxpayers irrespective of the state in which the property is situated. However, TDS on Property @ 1% is only applicable if the transaction value if more than Rs. 50 Lakhs. For a detailed note on TDS on Property, kindly refer the following link.

How can I repatriate money from the sale of property in India?

Yes, general permission is available to the NRls/PIO to repatriate the sale proceeds of the immovable property inherited from a person resident in India.

Who has to pay TDS on sale of property?

TDS has to be deducted by the buyer on the entire amount that is paid or credited to the seller when the amount exceeds Rs 50 lakh. For example, if a property is bought for Rs 70 lakh then TDS has to be deducted on the entire amount–that is Rs 70 lakh, not on just the Rs 20 lakh that exceeds the Rs 50 lakh threshold.