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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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. … You can exclude this amount each time you sell your home, but you can only claim this exclusion once every two years.

Do I need to pay tax when selling my house?

In NSW only buyers have to pay stamp duty on the sale of a property. … Unless you purchased the property before 1985, the sale of an investment property will usually attract Capital Gains Tax (CGT). However, you don’t usually have to pay CGT on the sale of your own home.

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).

How do I calculate capital gains on sale of property?

Calculating CGT using the discount method

  1. Subtract the cost base from the sale proceeds. The amount you are left with is your gross capital gain.
  2. Deduct any eligible capital costs.
  3. Apply any eligible discounts. …
  4. This figure is your net capital gain and will be added to your taxable income.
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How can I avoid capital gains tax in India?

Exemptions from your Gains that Save Tax Section 54F (applicable in case its a long term capital asset)

  1. Purchase one house within 1 year before the date of transfer or 2 years after that.
  2. Construct one house within 3 years after the date of transfer.
  3. You do not sell this house within 3 years of purchase or construction.

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.

Where should I sell my house for money in 2020?

Think about your home sale proceeds in 3 financial buckets

  1. Buy another property. …
  2. Explore the stock market. …
  3. Pay off debt. …
  4. Invest in priceless experiences, memories, and skills that last a lifetime. …
  5. Set up an emergency account. …
  6. Keep it for a down payment on a new house. …
  7. Add it to a college fund. …
  8. Save it for retirement.