The Buyt Desk
Buying property and selling it after a few years is a sort of investment that a lot of us do. It is considered a less volatile and secured investment. While working on this strategy, people forget associated tax exemptions. So, if you are planning to sell your luxury home and earn a large profit, then think again. Want to know why? Here, you’ll get the answer.
Any reinvestment of the sale proceeds going more than Rs. 10 crores will not provide you with a tax deduction. There is a cap on the tax-free capital gain on selling an expensive property.
It was noticed that high net-worth individuals were making claims of large deductions under these provisions by buying deluxe homes, eventually beating the very objective of the deduction. Applying this limit will discourage the practice of claiming a tax deduction on high-value sales. The government is hoping that this move will alleviate the extreme housing shortage and provides a push to the house-building activity.
The step to withdraw capital gain tax benefit on the sale of property or fixed assets, over Rs 10 crore, may disincentivize families from purchasing several residential properties as a security provision for their kids.
The budget has prohibited the clubbing of interest payments on the loan bought to get a property with its acquisition cost. So, when the purchased property is sold, the interest cost further can’t be an aspect of the acquisition cost in computing the capital gains.
The current provisions under Sections 54 and 54F facilitate deduction on the capital gains getting up from sending long-term capital assets if an assessee, within 1 year prior or 2 years after the transfer date bought any residential property in India. Or, it might be within 3 years after the construction date of any residential property in India.
At the bottom line, the budget has given that the acquisition cost or the improvement cost shall not comprise the interest amount claimed under Section 24.
