Tax on rent income and sold property!

BankBazaar.com

If you choose to use the capital gains from selling your house to buy a residential property, you will not be taxed and there is no tax liability from such a sale as stated under Section 54F of the Income Tax Act. You can also be exempted from tax if the long term capital gains or profit from the sale is invested for a period of three years in specific bonds of National Highways Authority of India or Rural Electrification Corporation Limited as stated under Section 54 EC. We discuss here what you need to know about computing taxes on the rental income for a house and the capital gains from the possible sale of a house is taken up for discussion in this article. A. Tax on Rental Income from a property When you own two houses and let out one of them for rent, you receive an income for which you need to pay tax. In such a scenario, the taxable income from the total rent income received by you for that particular financial year will be computed in your tax returns. How your rental income is computed For rented out properties the gross rent needs to be the greater of the three values below: a. Municipal valuation of the property