How to save capital gains tax on sale of property?

With increase in incomes and attractive home loan options, the interest of people in investing in Real Estate Property has increased more than ever. Be it a residential property in the form of a Flat, a Bungalow, a Villa, etc. or a commercial property in the form of a Shop in some complex or a large vacant Plot for industrial use- a great increase in the demand for Real Estate Property is being witnessed nowadays. People find investing in a property more lucrative than any other form of savings. The major reason behind this trend is the fact that these properties mean huge gains in the future. For instance, investment in a residential property provides more benefits than just one. First of all, the money spent on it will take the form of a saving as soon as you take the possession. Moreover, you can offer it for rent and ensure regular financial inflow. Lastly, once the prices go up, you can sell it and earn huge profits immediately.

However, these huge Capital Gains are not exempted from tax. Like all the other sources of income, this form of unexpected revenue generation has a tax imposed on it by the name of Capital Gains Tax. According to this, a fixed percentage of profit made by selling of any Capital Asset such as a House must be submitted to the government in the form of Tax. Technically, the profit arising from such a deal is termed as Long Term Capital Gain. The Government does offer exemption from Capital Gains Tax in certain cases. If the Capital asset is owned by individual or HUF then exemption from this tax can be provided if the proceeds of the sale are being reinvested in certain assets. Subject to certain conditions, this exemption is valid on following two conditions:

• If the profit made on selling a residential property is being reinvested in another residential property Investment of Long Term Capital Gains in notified bonds

Proper knowledge about Capital Gains Tax can save you from unnecessary legal troubles.One can also take help of professional legal consultant for appropriate guidance about Capital Gains Tax on Investment Property.