Selling Property After April 1, 2025, Can be Beneficial for you; Know Why
When property is sold after April 1, 2025, capital gains tax is postponed to the following fiscal year, giving you a full year to plan for tax savings and enhance your cash flow management.
Selling property – beneficial – taxscan
Selling property – beneficial – taxscan
Property owners planning to sell are advised to wait until after April 1, 2025, to maximise financial advantages. Selling after this date shifts the capital gains tax liability to the fiscal year 2025-26, offering sellers a significant deferment. It is important to note that selling a property before April 1st can have significant tax implications, as if the property is sold on March 30, 2025, the capital gain will be taxed in FY 2024-25 while selling the property on April 1, 2025, will shift the tax liability to FY 2025-26.
If the sale is postponed past April 1st, the tax due will be moved to FY 2025–2026. Due to this postponement, the taxpayer has a full year to plan and invest in ways to reduce their taxes.Moreover, when a property is sold after April 1, cash flow management becomes more efficient. Beginning on June 15, 2025, sellers may choose to spread out the advance tax payments into four installments rather than paying the entire amount due by March 31, 2025. The primary advantage is the capital gains tax deferment. Since the capital gain is taxed in the next fiscal year, if you sell the property after April 1st, you have a full year to make tax-saving investment plans.
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Furthermore, by July 31, 2026, rather than July 31, 2025, the sale profits may be deposited into a Capital Gains Account Scheme (CGAS) account. With this extension, an additional year is given to decide how best to use the money. In order to provide taxpayers more time to choose how to handle their money, the deadline for putting sale proceeds into a CGAS account has been extended to July 31, 2026.
Sellers can improve their capital gains reinvestment plan even further. Sellers can avoid paying capital gains tax by reinvesting proceeds into another residential property under Section 54 of the Income Tax Act. One of the options is to build a new home within three years of the sale, or buy a new property a year before or two years after the sale.
Section 54EC gives people who aren't reinvesting in real estate the option to purchase certain bonds, like those issued by the Rural Electrification Corporation or the National Highways Authority of India, within six months after the sale. With a five-year lock-in period, these bonds offer yet another way to save money on taxes.
Selling real estate in the following fiscal year after April 1, 2025, offers longer periods for calculated tax planning. By doing this, sellers improve their financial planning efforts and acquire flexibility in efficiently managing capital gains tax obligations. Additionally, by allowing for more thoughtful and possibly advantageous reinvestment choices, this action is consistent with more comprehensive cash flow management tactics.
The way long-term capital gains (LTCG) from residential real estate are taxed has not changed as a result of the new Income Tax Bill 2025. The tax on such LTCG is determined by subtracting any relevant surcharge and cess from the lower of 12.5% (without indexation) or 20% (with indexation) for properties purchased before to July 23, 2024.
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A property is classified as a long-term capital asset and the proceeds from its sale are subject to long-term capital gains tax (LTCG) if it is kept for more than 24 months before being sold.
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