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Old 22nd May 2009, 04:10   #1
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Hi,

I have a query about a certain tax related to property.

For example, you buy a house in '04 for 10L and you want to sell it in '09 and you are getting 25L for it now. There is a tax that you are charged for gaining that 15L on the house.

Does anyone know how much that tax is and any more details on it?
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Old 22nd May 2009, 06:50   #2
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Ok, Thats not known as property tax. If I am not wrong it is known as Long Term Capital Gains Tax and the rate is 10%(or is it 20) of the gains.

Good news is, if the amount earned is used for purchasing another house (within 3 yrs) or some bonds(within 2.5yrs) there is no tax on it.

Another important thing here is, tax will be only on the gains in the registered value of the property (which most of the time is quite less than the actual selling price of the property).

Also, I am not sure, but in your case gains will not be flat 15L...I think there is some inflation adjustment that you can do.

Regards,
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Old 22nd May 2009, 07:32   #3
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Property tax is something you pay every year to the municipality on your land or house/flat. I will have to ask the percentage but its quite irritating nonetheless

Last edited by prince_pervez : 22nd May 2009 at 07:33.
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Old 22nd May 2009, 08:18   #4
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I guess you need to know your tax implications from the gains to would be making post sale.

Now, the tax on long-term capital gains from the sale of assets is complicated as we need to take inflation into account. While it is complicated, but is a good thing as it reduces your capital gain and there by allowing you to pay less tax.

For details, check this link - All you wanted to know about capital gain
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Old 22nd May 2009, 14:11   #5
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Thanks guys. I was told that you need to buy another property within 6 months.
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Old 22nd May 2009, 15:19   #6
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What if I buy a car instead of another house?
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Old 22nd May 2009, 15:36   #7
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If you buy a car instead of a house, you would be a much happier man and no tax.
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Old 22nd May 2009, 15:38   #8
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Quote:
Originally Posted by straight6 View Post
Thanks guys. I was told that you need to buy another property within 6 months.
That's right. You can reinvest the gains in property only and to do so, you have 3 years time.
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Old 23rd May 2009, 05:01   #9
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Quote:
Originally Posted by beejay View Post
If you buy a car instead of a house, you would be a much happier man and no tax.
Are you sure I can do that?

Quote:
Originally Posted by muralisk View Post
That's right. You can reinvest the gains in property only and to do so, you have 3 years time.
So does that mean I can't buy a car?
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Old 23rd May 2009, 07:04   #10
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Quote:
Originally Posted by straight6 View Post
Are you sure I can do that?



So does that mean I can't buy a car?
Dude, Its your money, you can do anything with it!
But if you are spending the gains from sale of property on anything else except for a property, you will have to pay 10% tax on that.
So in the above case, assuming that after inflation adjustment, the gains are 10L and you reinvest 5L in another property and remaining 5L in a car, you will end up paying 10% tax on 5L.
End result: You will still have a piece of land & a car to make you happy...and govt will have 50k to keep themselves happy

Edit: One question. In your case, is the buyer registering the property at 25L? If not, officially your gains are only Registered Value at sell time - Registered value at buy time. Remaining money is popularly known as black money.


Regards,

Last edited by amohit : 23rd May 2009 at 07:08.
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Old 24th May 2009, 06:34   #11
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Quote:
Originally Posted by amohit View Post
Dude, Its your money, you can do anything with it!
But if you are spending the gains from sale of property on anything else except for a property, you will have to pay 10% tax on that.
So in the above case, assuming that after inflation adjustment, the gains are 10L and you reinvest 5L in another property and remaining 5L in a car, you will end up paying 10% tax on 5L.
End result: You will still have a piece of land & a car to make you happy...and govt will have 50k to keep themselves happy

Edit: One question. In your case, is the buyer registering the property at 25L? If not, officially your gains are only Registered Value at sell time - Registered value at buy time. Remaining money is popularly known as black money.


Regards,
You see, if I take more black, then it'll be a problem while buying a vehicle.
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