I bought a property 'A' in 2008 for Rs8.5 lacs and I am planning to sell it in aug2011 for 13 lacs. will it attract capital gain tax? Also I have booked another flat 'B' for Rs 40 lacs in joint name with my spouse in 2009, which we will get possesion in oct 2012. In case I reinvest this amount in property 'B'can I get exception.
1 Answers
If three years have been completed before selling property A, it will long term capital gains and income tax will be applicable on gains @ 20% after indexation benefit.
If its kept for less than three years, gains will be added to your taxable income and taxed as per your tax slab rates. There is no way to save tax in this case.
In first case (long term gains), tax can be saved fully if a new residential property is purchased within two years of sale of old property with amount more than gains amount. As you are already getting possession for a new house with your share more than gains, no income tax will be payable.
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