In India, people have an affinity for investing in property. However, while making such investments, investors must know about the Long Term Capital Gain (LTCG) tax being levied on real estate income. They should also know about the terms and conditions and relaxations involved in LTCG on property. Not knowing tax and investment real estate investment rules may lead investors to land in trouble.
Speaking on when LTCG becomes applicable on real estate income, Balwant Jain, a Mumbai-based tax and investment expert said, “LTCG is applicable if someone has bought an under construction inventory and decided to sell it after three years. However, in case of ready to move in property, the LTCG becomes applicable after two years only.” Jain clarified that for under construction property the period is three years. “If the property is sold before possession, then only the three years period will apply. If it is sold after possession the period will be two years from the date of possession.”
On how the capital gains can be brought out of tax net Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, “One can keep the capital gains on real estate investment in the capital gain account in the bank for three years. In these three years, investors can re-invest the money into another real-estate property. By keeping the money to the capital gain account, investors can avail the interest as per rate being provided on the savings accounts of the account holders in the bank. Apart from this, to get more gains, investors can put up to Rs 50 lakh into the capital gain bonds but the investment has to be done within six months of sale.”
On other benefits that a real estate investor can avail, Jitendra Solanki, a SEBI registered investment expert said, “While accounting your capital gain on real estate property, one needs to deduct the brokerage being paid during the buy and sale of the property. Apart from that, one’s spending on repair and maintenance of the property, can also be deducted from the original gains. But, for availing these deductions from the capital gains, one must have proper bills being raised against his or her name with proper heads being mentioned.”
(Source: Zee Biz)