If you want to sell your house property there are certain income tax implications that will help you to save your tax and help to build a better decision about selling your house.
1. If a property is sold within three years of buying it, any profit from the transaction is treated as a short-term capital gain and added to total income of the owner of such house house property.
2. If you sell after three years, the profit is treated as long-term capital gains and taxed at 20% after indexation.
3. There is no tax to be paid if you use the entire gain from the transaction to buy another house within two years or construct one within three years. However, the entire tax exemption will be reversed if the new property is sold within three years of purchase or construction.
4. If you are not locked your gain in investing another house then you can invest You can claim exemption under Section 54 (EC) by investing the long-term capital gains for three years in bonds of the National Highways Authority of India and Rural Electrification Corporation Limited within six months of selling the house. (invest only up to 50 lakhs in P.F.Y)
5. sellers also have the option of investing the entire long term capital gain in a tech. driven start-up (certified by the Inter-Ministerial Board of Certification) to get relief from tax
6. you can set off these long term capital gains against any previous year long term capital loss as well as short term capital loss for the sale of other long term capital assets. These losses can carry forward up to 8 years. However your short term capital losses can only be setoff against short term capital gain.
7. If a buyer buys a house more than 50lakhs then he has to deduct TDS @1% before making any payment to seller.
8. If you are unable to reinvest the gains in another house or bonds before filing your tax return for the year in which the sale took place, deposit the balance in the Capital Gains Account Scheme so that you are eligible for the deduction.