Selling your flat. Beware of Tax man
| Are you aware of our tax laws for capital gains? I was tempted to write this article based on the experience one of friend had with his sale of his premium flat in Adyar. My friend negotiated the deal for around Rs 60 Lakhs for his 3 bed room 9 year old flat in Adyar. Since he already had a house in his name, he was not aware of tax implications for the sale of the second flat he had. |
One visit to a local tax consultant revealed that he need to shell out at an average 20% of the capital gains towards tax. Thats a ooping 12 lakhs gone out of your profit. Might be this figure may be bit high but the average capital gains calculation is bit complex with lots of factors including Indexation, age of the flat etc.
There is not much you can do to avoid Tax on sale of your second home. If you dont have any other property in your name and you are selling the only home you have in your name, then you can avoid tax by re-investing in a new home within 2 years time period.
There are other numerous ways of reducing tax, one popular way being showing additional expenditure apart from home cost price. You can include all the wood work, repairs, interior desigining works etc as part of the apartments original cost. This increases your cost of ownership and there by decreasing the capital gains and inturn the tax.
I found a good article in rediff which i thought would be nice to share with our readers.
Thanks for good article