How can I avoid capital gains tax on property sale in India?

How can I reduce capital gains tax on property sale?

6 Strategies to Defer and/or Reduce Your Capital Gains Tax When You Sell Real Estate

  1. Wait at least one year before selling a property. …
  2. Leverage the IRS’ Primary Residence Exclusion. …
  3. Sell your property when your income is low. …
  4. Take advantage of a 1031 Exchange. …
  5. Keep records of home improvement and selling expenses.

How can I save my tax if I sell my property in India?

How to save tax on property sale?

  1. Holding period for capital gains.
  2. Benefits under Section 54 on purchase of new property.
  3. Indexation benefits on capital gains on sale of a property.
  4. Exemptions under Section 54 EC on purchase of specific bonds.
  5. Exemptions under Section 54GB.
  6. Setting off gains against losses.

How do you avoid tax on property sale?

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.
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Do seniors have to pay capital gains?

When you sell a house, you pay capital gains tax on your profits. There’s no exemption for senior citizens — they pay tax on the sale just like everyone else. If the house is a personal home and you have lived there several years, though, you may be able to avoid paying tax.

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

If you are planning to sell your property, you’ll have to pay capital gain tax on the profit earned after considering the inflation and indexed cost of acquisition. … If you’re selling a property in India, the profits you earn are called Capital Gains.

How can I save my long term capital gains tax on sale of property in India?

Invest in Bonds

Investment in such financial assets holds power to save your arduously earned capital gains as these long term capital gains are exempted under Section 54EC of the Indian Income Tax Act, 1961.

How do I calculate capital gains 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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What happens if I sell my house and don’t buy another?

Profit from the sale of real estate is considered a capital gain. However, if you used the house as your primary residence and meet certain other requirements, you can exempt up to $250,000 of the gain from tax ($500,000 if you’re married), regardless of whether you reinvest it.

Who is exempt from capital gains tax?

The Internal Revenue Service allows exclusions for capital gains made on the sale of primary residences. Homeowners who meet certain conditions can exclude gains up to $250,000 for single filers and $500,000 for married couples who file jointly.

Do you have to buy another home to avoid capital gains?

In general, you’re going to be on the hook for the capital gains tax of your second home; however, some exclusions apply. … However, you have to prove that the second home is your primary residence. You also can’t get the exclusion if you have already sold a different house within 2 years of using the exclusion.