Capital gains tax arise when you make profit from your investment in property
2) in present case you are making loss
3) no question of payment of capital gains tax tax arise
4) you are at liberty to execute gift deed in favour of your parents
Would selling a property in loss also incur capital gains tax
I purchased a property in Kochi, Kerala in 2014 for 31 lakhs. Because this is in a less demanding location, I unfortunately am selling this property at a huge loss for just 26 lakhs. Would I still have to pay ~25% capital gains tax? My plan was to just transfer the entire money to Australia (I am a citizen here). I wasnt expecting any tax on this money. What are my options to avoid tax - reinvest in property or bonds in India? What if I transfer the property ownership to my parents in India, and they gift the money to me rather (after selling the property under their ownership)?
Asked 4 years ago in Property Law
Religion: Other
13 Answers
There is no capital gains on sale
In fact there is a capital loss
So there wont be charged any capital gains tax
But since you are not an Indian citizen, the purchaser will have to deduct the full tax deduction at source
You then have to claim refund of the same from the income tax department by filing your income tax returns here which is pretty quick. Please engage a Chartered accountant for that.
You can also transfer the property to your parents by way of a gift deed. But that will attract stamp duty as per the State law. You are already selling in loss so why do you want to incur expenses and incur additional losses?
No you don't have to pay captial gain tax, here you had made loss. Only let me know whether you had registered 31 lakhs rupees transaction while purchasing or less amount you have shown in the agreement.
If the actual amount is 31 lakhs rupees in the agreement then no need to worry.
Thank you, all your responses are helpful, I would like to know a bit more to be clear. yes I have the amount 29lakhs on the agreement. Considering this is a loss, is there any way I can avoid the TDS + reclaim it through tax returns. Rather can I declare this is a loss transaction at source to avoid TDS? In the case of gifting it to my parent how is the stamp duty calculated - (I valued it to zero and gifted it). What would be base valuation of property to calculate the stamp duty, and what percentage is the stamp duty. Thanks again, highly appreciate your help.
Asked 4 years ago
If you want to avoid deduction of TDS execute gift deed in your parents favour
2) stamp duty is payable on market value of property as on date ie Rs 26 lakhs
3) stamp duty is state subject and varies from state to state
Dear sir,
Please note that a gift deed can help you avoid TDS deduction. Also, as far as your queries regarding stamp duty is concerned, this is something which varies from state to state. It is advised that you get this information from the concerned state authorities. Thank you.
Capital gain tax is, what is says, tax on gains from capital asset. When you don’t make any gain from capital where is the question of paying tax. In search deeper meaning sometimes we lose sight of what is obvious. You need not pay any tax if there is not gain, in fact there is loss.
You are entitled to claim refund as there is no income. Stamp duty of gift deed is 0.25 of the market value/circle rate and tds is 0.75% not 1% as previously it was.
- As per Income Tax , a house property is a capital asset.
- Further, any gains or losses arising from the sale of a capital asset are capital gains or capital losses.
- Further, the gains are taxable in the year when this transfer of asset takes place , and in the case of capital loss, the same can be carried forward for set-off against any future capital gains for a period of 8 years
. Since, there is loss in the sale of property , hence no need to pay any tax for loss ,
- No, stamp duty for gift deed .
This is loss transactions and you can get exemption if you take whole 26 lakhs to Abroad.
any profit or gain that arises from the sale of a ‘capital asset’ is a capital gain. This gain or profit is comes under the category ‘income’, and hence you will need to pay tax for that amount in the year in which the transfer of the capital asset takes place.
A capital loss is the loss incurred when the value decreases for a capital asset, such as an investment or real estate. This loss will not be realised until the asset is sold for a price lower than the purchase price originally.
For instance, if an investor bought a house for Rs 25 lakh and sold the house five years later for Rs 20 lakh, the investor realises a capital loss of Rs 5 lakh
If you so desire to transfer the property to your parents, you can very well do it and after that it is their decision to transfer the sale consideration amount to you after they sell the property.
The income tax does not allow losses to be offset against any income from other heads under capital gains - this can only be offset within the heading 'Capital Gains'. Long-term capital losses can only be set against long-term capital gains. Short-term capital losses may be offset against both long-term earnings and short-term earnings.
A capital loss is the result of selling an investment at less than the purchase price or adjusted basis.
Any expenses from the sale are deducted from the proceeds and added to the loss. . A capital loss directly reduces your taxable income, which means you pay less tax.
Tax rates also matter when it comes to losses. If you are in the 10% or 15% brackets, you won’t owe any capital gains taxes on assets sold for a profit.
1. You have not made any capital gain by selling the said property for which no capital gain tax will be levied on you.
2. For taking the sales proceeds abroad, you shall have to avail approval from the RBI.
1. The value of the property will be decided as per the circle rate maintained by the Registrar.
2. Stamp duty is a State subject and for gifting to your parents, 0.5 % stamp duty is normally charged by most of the States.