I have purchased a land in my village and constructed a house on it from my retirement fund in the year 2021 , which costed me a total of Rs. 35 lakhs, and i am residing in the same house at present . Now if i want to sell the house, what will be the tax implication on the sale of the house (LTCG/STCG), how it will be calculated , since I have constructed the house on labour payment system. I have bills only for some items with me. Regards, G Ramesh
Ans: Navigating the tax implications of selling a property can feel like a maze, especially when the construction was done through the labour payment system. The tax you might owe depends on whether the property qualifies as a long-term or short-term capital asset.
If you sell the house within two years of its completion, it's considered a short-term capital gain. However, if you hold onto it for more than two years, it becomes a long-term capital gain. The difference in these classifications could significantly impact your tax liability.
Now, about those bills. Having proper documentation can be your best friend in establishing the cost of construction. While you may not have bills for everything, any documentation you have can help in reducing your taxable gain.
Remember, taxes are just one part of the equation. It's also worth reflecting on the emotional value of the home you built. It's not just bricks and mortar; it's a place filled with memories and stories. Whatever you decide, I hope it aligns with both your financial needs and heartfelt attachments.
