Indexation Benefits Removed for Property Sale: What it Means for Investors
property sale, LTCG rate, real estate and gold, Union Budget, investment
Property SaleLtcg RateReal EstateInvestmentUnion BudgetReal Estate NewsJul 24, 2024
This move will ease the computation of capital gains for the taxpayer and tax administration. However, old real estate investments will continue to get indexation benefits up to the year 2000. This means that if a residential property was purchased in 1975 and is sold now, the seller can avail indexation benefit up to 2000, but not for the remaining 24 years.
Sellers of residential properties can continue to claim exemption under Section 54 of the Income Tax Act. The section provides for an exemption on the long-term capital gains tax from sale of residential property if the proceeds from the sale are used to purchase or construct another residential property.
The new tax rate of 12.5% without indexation benefit may be better or the old tax rate of 20 per cent with indexation. Rough calculations show that if the inflation levels are low and the property price increase is faster, then the new system will work out better for sellers.
Many in the real estate industry and investment advisory space say that with real estate taxation coming at par with long-term capital gains tax of 12.5 per cent on equity investments, investors may sway towards the equity segment, which is relatively far more liquid and has ease of transaction.
Only the salaried class may avoid real estate and switch to equities for ease of transaction and liquidity, after the tax rate for both have come at par. Those dealing in cash and investing large sums in real estate will continue to invest in the same (real estate).
Frequently Asked Questions
What is the new LTCG rate for property sale?
The new LTCG rate for property sale is 12.5% without indexation benefit.
Will old real estate investments still get indexation benefits?
Yes, old real estate investments will continue to get indexation benefits up to the year 2000.
Can sellers of residential properties claim exemption under Section 54 of the IT Act?
Yes, sellers of residential properties can continue to claim exemption under Section 54 of the Income Tax Act.
How will the new tax rate affect investors?
The new tax rate may affect investors who may sway towards the equity segment, which is relatively far more liquid and has ease of transaction.
Will this move lead to an increase in black money transactions?
According to some experts, this move may lead to an increase in black money transactions going forward.
Related News Articles
Rohan Builders Achieves Unparalleled Excellence with 14 Consecutive Years of CRISIL DA2+ Grading
Rohan Builders continues to maintain its prestigious DA2+ Developer Grading from CRISIL, demonstrating its commitment to excellence in financial and operational parameters.
Sebi Chief Remains Tight-Lipped on Real Estate Investment Trusts
REITs comprise a portfolio of commercial real estate assets, most of which are already leased out.
PGA of America Launches State-of-the-Art Golf Courses in Mumbai, Navi Mumbai, and Hyderabad
AIVOT Golf & Sports Management collaborates with Shapoorji Pallonji Real Estate, Stonecraft Group, and Tvastar Golf to introduce PGA of America-branded golf courses in Mumbai, Navi Mumbai, and Hyderabad, setting a new standard for golf excellence in India
Raymond Expands Real Estate Footprint with Mahim Project Deal
Raymond, in a strategic move, has signed a Joint Development Agreement for a prestigious residential project in the prime location of Mahim West, Mumbai.
Amrita Singh, Zaheer Khan Among Celebrities Investing in Mumbai's Luxury Real Estate
Amrita Singh and Zaheer Khan are among the latest celebrities making significant investments in Mumbai's luxury real estate market. Discover the trends and insights of these high-profile investments.
SP Group Raises $3.3 Billion from Five Funds to Boost Real Estate and Construction Projects
SP Group secures a significant $3.3 billion investment from five prominent funds, aimed at refinancing and expanding its real estate and construction projects. This strategic move will help the company solidify its position in the market and drive sustain