Taxpayers can lose tax breaks in a hurry to exit investments
January 18, 2017
Taxpayers revise & e-file your income tax return with H&R Block India
January 30, 2017

Know the Tax Implications While Selling a House

If you are planning to sell a property, along with strong cash inflow you may also get burdened by higher tax liability in the process.


When you are planning to sell your house, make sure you understand the short term and long-term capital gains and when you are eligible for them. If you sell your house within 3 years of its acquisition, the profit earned on it will be called as a short-term capital gain. Long term capital gain is selling the house after a period of 3 years from the time of its acquisition.

In the case of selling the property within 3 years, the capital gain is added to the income of the owner and then taxed according to the slab rate applicable to him. Also, the tax benefits that the owner has claimed on the purchase of the house are reversed if it is sold within 3 years. The owner can only benefit from the deduction of the interest payment under Section 24B.

Hence, it is advisable to hold your property for minimum 3 years and then put it on sale. If you sell the property after 3 years, the profit is taxed after indexation. Indexation considers the inflation during the holding period and then adjusts the purchase price, thereby, slashing the tax liability of the seller. The owner of the property can claim other exemptions as well which is otherwise not applicable in the case of short-term capital gains.

Our Managing Director, Mr Vaibhav Sankla, was asked for his opinion on the matter and he pointed out the benefits of selling the property after 3 years. He said that the owner could add the repair and renovation expenses to the total cost of acquisition while calculating the long-term capital gains.

Source : Economic Times