I have sold property with minor losses after indexation.. should I use ITR1 to file?

Ans: or FY 22-23, ITR forms yet to be notified and some major changes are expected. So wait till April 2023.

Ans: Indexation loss is not required to be recorded in books of account

Ans: If the amount is reinvested into a residential property before the date of filing the ITR then you will be eligible to claim deduction.

Please check whether such expenses can be claimed or not from your CA. If yes, you can claim it in this year's ITR itself. These expenses ought to be available but please double check it.

Ans: Understanding Your Capital Gains Scenario
You invested Rs. 93.5 lakhs in a commercial property in 2017. This property was jointly owned with your wife. The total cost, including expenses, was Rs. 1.09 crores. You sold the property in 2024 for Rs. 1.1 crore. This transaction resulted in a loss of Rs. 31.24 lakh, split equally between you and your wife.

Filing ITR2 with Capital Losses
The income tax system calculated a capital loss of Rs. 15.62 lakh for each of you. This loss has been set off against your long-term capital gains from other share transactions. The remaining loss can be carried forward.

Submit ITR2: Yes, you can finalize and submit ITR2 as shown. The system's calculation is correct.
Carry Forward and Set-Off of Capital Losses
The Income Tax Act allows you to carry forward capital losses for eight years. These losses can be set off against future capital gains.

Using Carried Forward Losses: Yes, you can use the carried forward losses to set off against future capital gains from share market transactions. This helps in reducing your taxable income in future years.
Analytical Insights
Loss Set-Off: By setting off the loss against your other gains, you reduce your tax liability for the current year. This is a strategic move.

Carry Forward Benefit: Carrying forward losses provides a cushion for future gains. It helps in managing tax liabilities efficiently.

Key Considerations
Record Keeping: Ensure you maintain all documents related to the sale and purchase of the property. This includes agreements, receipts, and tax filings. These documents are crucial for future reference and any tax scrutiny.

Tax Planning: Consider consulting a Certified Financial Planner for comprehensive tax planning. They can help optimize your investments and tax liabilities.

Future Investment Strategy
Diversification: Diversify your investments to balance risk and return. Consider mutual funds, bonds, and fixed deposits.

Risk Management: Assess the risk of each investment. Balance high-risk investments with safer options to protect your capital.

Final Insights
Managing capital gains and losses is crucial for effective tax planning. You have used the tax provisions wisely by setting off the losses against other gains. Carrying forward the remaining losses will help reduce your future tax liabilities.

By diversifying your investments and consulting with a Certified Financial Planner, you can optimize your financial portfolio for better returns and risk management.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in