Gift Property Sale Tax Rules: Long term and short term capital gains tax is applicable on sale of gifted property depending on the holding period. Long capital gain is always calculated on the basis of net sale proceeds. From this the cost of acquiring the house or land and the cost of improvements to the house are deducted. (Jagran Graphics)
Gifted Property Sale Tax Rules in India: In India, the practice of gifting property (land and house) has been going on from generation to generation. People gift property to their children, relatives and friends during auspicious or auspicious events. The rules and regulations regarding property in India are very strict and along with stamp duty, many other types of taxes are also charged by the government on its purchase and sale.
In such a situation, a question arises in the minds of many people whether the property received as a gift is taxable.
What is the tax rule on sale of property received as gift?
If a taxpayer has received immovable property like house and land from parents or any other relative without paying any amount during the financial year and stamp duty of more than Rs 50,000 has been paid on it, then there is no tax on holding such gift property. There is no tax.
Whereas, if any such property is sold. Then Capital Gain Tax is levied on it. If the property is held for more than 24 months, it will attract long term capital gains tax. Short term capital gains tax is applicable if the period is less than this.
How is Capital Gain Tax calculated on property received as gift?
If any property like land or house has been received as a gift, then its holding period will be calculated from the time when the person giving the gift purchased that property.
For example, if a property purchased in 1990 is gifted in 2022 and is being sold in 2023. In this situation, long term capital gains tax will be levied on it and it will be calculated from 1990. Apart from this, if the property purchased in 2022 is gifted in 2023 and the property is sold in the same year, then short term capital gains tax will be levied on it. .
Long capital gain is always calculated on the basis of net sale proceeds. From this the cost of acquiring the house or land and the cost of improvements to the house are deducted.
How much is Capital Gain Tax?
If the holding period of a property is more than 24 months, then long term capital gains tax is levied on it. Capital gains tax on property is 20 percent including surcharge and cess. In this the rule of indexation is followed.
If the holding period of the property is less than 24 months, then short term capital gains tax will be charged on it as per the income tax slab of the taxpayer. This means that if a person has short-term income from property, it will be added to his income and tax will be charged on it.
