Capital Gains Tax on Property
How profit from selling a house or land is taxed, the 24-month rule, indexation choices, and ways to claim exemption.
When you sell a house, plot or flat at a profit, the gain is taxable. How much depends on how long you owned it and on current rules, which changed in 2024.
Short term or long term
Property held for 24 months or less is short-term, and the gain is added to your income and taxed at your slab rate. Property held longer than 24 months gives a long-term gain.
Long-term rate
Under the rules from July 2024, long-term gains on property are taxed at 12.5% without indexation. For property bought before 23 July 2024, resident individuals and HUFs can in some cases choose the earlier 20% rate with indexation, whichever works out lower. The right choice depends on how long ago you bought and how much prices rose, so run both.
Working out the gain
Gain equals the sale price minus your purchase cost, the cost of improvements, and transfer expenses such as brokerage. Keep every document.
Ways to reduce or avoid the tax
- Section 54: reinvest the gain from a residential house into another residential house within the prescribed period.
- Section 54EC: invest the gain in specified bonds within six months, with a cap and a lock-in.
- Section 54F: for gains on other long-term assets, invest the sale proceeds in a house, with conditions.
Each exemption has limits and conditions, so read the current section text or ask a professional before relying on it.
Report it
Property sales must be reported in your return. See how to file your ITR, and check what you can borrow with the home loan eligibility calculator if you are buying again.
Property tax rules are detailed and change often. This is not tax advice; consult a chartered accountant before selling.
Frequently asked questions
How long must I hold property for long-term gains?
More than 24 months under current rules.
Can I avoid tax by buying another house?
Often partly or fully, under Section 54, if you meet its conditions and time limits.
More guides
Calculators
Last reviewed: October 2026. General education, not financial advice.