How to Calculate LTCG on Property
| Step | Item | Example Amount |
|---|---|---|
| 1 | Sale consideration (or stamp duty value — whichever is higher) | ₹1,20,00,000 |
| 2 | Less: Cost of acquisition (purchase price + stamp duty + registration + brokerage) | ₹55,00,000 |
| 3 | Less: Cost of improvement (renovation costs with documentation) | ₹5,00,000 |
| 4 | Less: Transfer expenses (brokerage, legal fees for sale) | ₹1,50,000 |
| 5 | Long-Term Capital Gain | ₹58,50,000 |
| 6 | LTCG Tax at 12.5% | ₹7,31,250 |
| 7 | Add: 4% cess on tax | ₹29,250 |
| 8 | Total tax payable | ₹7,60,500 |
How to Save LTCG Tax
LTCG Tax Saving Options
- Section 54: Reinvest LTCG in one new residential house — purchase within 2 years or construct within 3 years. Exemption = amount reinvested in new house.
- Section 54EC: Invest up to ₹50 lakh in REC or NHAI bonds within 6 months of sale. 5-year lock-in — cannot sell before 5 years.
- Section 54F: Selling any long-term asset other than a house — invest full sale consideration (not just gain) in a residential house for full exemption.
- Capital Gains Account Scheme: Deposit LTCG in CGAS before ITR due date if reinvestment not yet done — preserves exemption window.
- Set off losses: Any long-term capital losses from other assets can be set off against LTCG from property in the same year.
Related Terms
Frequently Asked Questions
LTCG arises when a property held for more than 2 years is sold at a profit. Post Budget 2024 (July 23, 2024), LTCG on property is taxed at 12.5% without indexation. Previously it was 20% with indexation. Key exemption: reinvest the gain in a residential house under Section 54 for full or partial exemption from tax.
From July 23, 2024: LTCG on property is 12.5% without indexation benefit. Add 4% health and education cess — effective rate approximately 13%. Applicable surcharge also applies for high-income taxpayers. For properties purchased before July 2024, compare the tax under the old regime (20% with indexation) vs new regime and use the more beneficial option — consult a CA.
LTCG = Sale Price − Cost of Acquisition − Cost of Improvement − Transfer Expenses. Cost of acquisition includes purchase price, stamp duty, registration, and buying brokerage. Cost of improvement includes documented renovation costs. Tax = LTCG × 12.5% + 4% cess. If sale price is below stamp duty value, stamp duty value is used as sale consideration.
Main options: (1) Section 54 — reinvest in a new residential house within 2 years (purchase) or 3 years (construction), (2) Section 54EC — invest up to ₹50 lakh in REC/NHAI bonds within 6 months, (3) Set off against long-term capital losses, (4) Use Capital Gains Account Scheme to preserve reinvestment window. Consult a CA to choose the best option for your situation.
Yes. When you sell an inherited property, LTCG applies on the profit. The cost of acquisition for the heir is the original cost to the deceased (not the market value at time of inheritance). The holding period also includes the period the deceased held the property. So an inherited property bought by the deceased 10 years ago qualifies as long-term from day one for the heir.