To save on capital gains tax when selling property, various strategies can be employed:
- Utilize Indexation Benefit: For long-term capital gains (property held for at least two years), indexation adjusts the purchase cost for inflation, reducing the taxable gains and the associated tax liability.
- Joint Ownership: If co-owning the property, dividing capital gains based on ownership shares can lower the tax burden by optimizing the basic exemption limit for each co-owner.
- Reduce Selling Expenses: Deduct expenses such as brokerage fees from the sale price when calculating capital gains, which can lower the taxable amount.
- Live in the Property or Renovate: Reside in the property for over two years or document renovation expenses to increase the property’s cost, thereby reducing taxable capital gains.
- Purchase a New Property (Section 54 Exemption): Reinvesting capital gains in another residential property within a specific timeframe can offer tax relief. Buy a property within a year before or two years after the sale, or construct a new property within three years.
These strategies can help property sellers minimise their capital gains tax liability effectively
