What is the cost of acquisition for inherited property?
It is the cost to the previous owner, with indexation from the year the previous owner acquired it where the indexation option applies. If the previous owner acquired it before 1 April 2001, you can take its fair market value on that date as the cost. The holding period includes the period for which the previous owner held it.
Is stamp duty value used instead of the sale price?
Under section 50C, if the stamp duty value of the property is higher than the sale price, the stamp duty value is taken as the sale consideration for computing the gain, subject to a tolerance band. If the buyer paid less than the stamp duty value, we examine the valuation. We check the circle rate before you sign.
Can I deduct brokerage and legal fees?
Yes. Expenses wholly and exclusively for the transfer, such as brokerage, legal fees and stamp duty on the sale agreement, are deducted from the sale price. Improvement costs, not repairs, are added to the cost, with proof of payment. Keep every bill and bank record.
What if I sell the property at a loss?
A long-term capital loss on property can be set off only against long-term capital gains and carried forward for eight years, provided the return is filed on time. A short-term loss can be set off against any capital gain. We compute the loss and document it so it can be carried forward.
Who deducts TDS when I sell a property?
For a resident seller, the buyer deducts 1% TDS under section 194-IA when the consideration is ₹50 lakh or more, and files Form 26QB. For a non-resident seller, TDS is under section 195 at capital gains rates on the whole value. The TDS is credited to you in Form 26AS.
When is the tax due on a property sale?
Tax is payable as advance tax in the instalment period in which the sale happens, with any gain in the last window payable by 15 March. If you miss, interest under 234C applies. If you reinvest, you may avoid tax altogether by following the section 54 conditions. We calculate the amount and the date.
Do I have to pay tax on capital gains even if I reinvest?
Not always. Sections 54, 54F and 54EC allow exemption from long-term capital gains when you reinvest in specified assets within fixed time limits. The exemption is conditional, so the reinvestment must match the section and the deadline. We check eligibility before you commit money, not after the return is filed.
Which ITR form is used when I have capital gains?
Most individuals with capital gains file ITR-2. If you also have business or professional income, it is ITR-3. ITR-1 is allowed only for long-term capital gains on listed shares or equity mutual funds under section 112A up to ₹1.25 lakh, and only when you have no other capital gains.
Is advance tax payable on capital gains?
Yes, once the gain arises. Advance tax is due on capital gains in the instalment period in which the sale happens, and any gain in the last instalment window can be paid by 15 March. Interest under section 234C is avoided if you pay in the remaining instalments after the gain arises.
