Calculate Indexed Cost and LTCG (Long Term Capital Gain) for period upto 31.03.2017. Indexed Cost & LTCG Calculator-New (w.e.f. 01.04.2017) ... If cost of new asset is greater than the net consideration received, the entire capital gain is exempt.
Let's assume you buy a property for Rs 25 lakh and sell it after five years for Rs 35 lakh, making a profit of Rs 10 lakh. However, your actual gain will be lower after indexation. Long-term capital gains from real estate are taxed at 20%. You cannot claim regular tax deductions against long-term capital gains.
Any profit booked after three years of buying the property is considered a long-term gain. The calculation is the same as that for short-term gain, except that the cost of acquisition and improvement is adjusted for inflation (called indexation ).
Houses are a popular investment option. Long-term capital gains from selling a house get tax exemption if they are invested in buying or building a new house. The new house has to be bought one year before the transfer of the first house or within two years after the sale. The deduction allowed is equal to the actual investment or the capital gain, whichever is lower.
If you plan to use the gain to build a house, it has to be done within three years of the sale of the property. When you buy a plot to build a house, the cost of land is included in the construction cost. Even buying an under-construction property entitles you to tax deduction.
If you intend to buy property jointly on your wife's name too, then the plot on her name also can be sold and you both can jointly buy a new house property to claim exemptions on LTCG