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LTCG from sale of house

Tax planning 104 views 2 replies

Sreehari Maddipatla

7 Points Joined December 2021

Sir/Madam,

I booked a flat in March 2024 and have been paying instalments regularly. The construction is expected to complete and flat is expected to be registered in June 2026. I want to sell my self-occupied house and I expect LTCG. When should I sell this self-occupied house to save the LTCG from tax ?

Sreehari

Replies (2)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9016 Points Joined December 2011

To minimize long-term capital gains (LTCG) tax on selling your self-occupied house, consider the following factors: -

*Holding Period*: Since you've held the house for more than 24 months, you'll be eligible for LTCG tax rates.¹

- *Tax Rates*: You can choose between a 12.5% tax rate without indexation or a 20% rate with indexation, depending on when you acquired the property.

Since you didn't mention the acquisition date, assume the 12.5% rate applies. -

*Indexation Benefits*: If you acquired the property before July 23, 2024, you might still be eligible for indexation benefits, which could reduce your taxable gains.

To save on LTCG tax, consider selling your self-occupied house after June 2026, when your new flat is registered.

This allows you to: - *Reinvest in a New Residential Property*: Under Section 54 of the Income Tax Act, you can claim exemption from LTCG tax by reinvesting the gains in a new residential property within two years of selling the original property. -

*Claim Exemptions*: If you're eligible, claim exemptions under Sections 54, 54F, or 54EC to reduce your taxable gains.

Sreehari Maddipatla

7 Points Joined December 2021

Thank you very much ,Sir.

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