Seven things to know after selling your home

When you have finally sold your home, there is a great relief which comes with the knowledge of a humongous task being completed. But there are a few things to keep in mind after you have sold your home. Emotional detachment from a property where you created memories is not easy, but needs to be slowly achieved. Secondly, you need to keep certain papers safely and you also need to decide what to do with the sales proceeds. Here is a list of important things to know.

How to detach emotionally?

The place you once called home is no longer yours. It is as simple as that. In all probability it was your abode for a number of years, but you decided to sell it as you moved to another location or a larger space. The best way to detach yourself from the home is to tell yourself that no one can take away from you the happy memories you created there! Also, since the new occupant is probably a good soul, the property will be well looked after.

Which papers should I have with me?

It's very important to keep all the paperwork related to the sale transaction in order. This includes:

• Copy of the Sale Agreement: The sale agreement lays out each and every single detail of the transaction and it is imperative that you keep a copy of this document
• Society transfer fees receipt: The buyer and the seller usually share equally the society transfer fees which are paid. Remember to keep your receipt safely.
• TDS challan: Usually the buyer pays a 1% TDS (of the sale price) at the time of purchase and gives the seller a TDS challan. Keep this carefully as you need it when filing IT returns. For NRI buyers the TDS is higher than for residents.
• Utility Bills: The last electricity, gas bills and society charges paid. This is helpful in case the new owner comes up with random unpaid bills claiming them to be due from you.
• Brokerage: Proof of the brokerage paid.
• Loan closure letter: In case you had taken a loan for the purchase of your house it is essential that you keep this carefully with you.

How much capital gains tax to pay?

You need to pay long term capital gains tax on the sale of a residential property if you have held

the property for more than 2 years and if you have made a profit on the sale of the property. The

profit is calculated by arriving at the indexed value of the property. If you have held the property

for less than 2 years, you have to pay short term capital gains tax on sale. The long term capital gains tax is applied at 20% on the gain amount and short term capital gains tax depends on the income tax bracket you fall under.

Know all about capital gains tax in this article.

When do I not pay Capital Gains Tax?

In case you have made a gain on the property sold, you need to re-invest the gain amount into another residential property within 2 years of sale or within 3 years (for under-construction) properties, if you do not wish to pay the 20% long term capital gains tax. If the price of the property purchased is more than the gain amount, no capital gains tax will be levied. If the price of property purchased is lesser than the gain amount, the amount left after purchase of new property will be taxed.



Till you invest the gain amount into a new house, you should deposit it in a Capital Gains Account scheme, in case the new house is not purchased before the filing of the income tax return. In case the new house is purchased before the filing of the income tax return, it is not necessary to invest the amount in a Capital Gains Account.

You could also invest the gain amount into Capital Gains Bonds/Sec 54EC including REC, NHAI, Power Finance Corporation and Indian Railway Finance Corporation bonds which are risk free and offer approximately 5% returns annually. They however have a lock in period of 5 years and the maximum amount you can invest is Rs. 50 lakh.

What is a Capital Gains Account?

A capital gain account can be opened in any authorized bank recommended by the government which includes Central Bank of India, State Bank of India and its subsidiaries, Syndicate Bank, IDBI Bank, Bank of Baroda and Corporation Bank. This account is meant for keeping tax payers’ sales proceeds from sale of assets, till they can be reinvested, without incurring the heavy long term capital gains tax. Proof of the account must be given at the time of filing income tax returns which are to be tax-exempted.



There are 2 types of Capital Gain Account schemes:

• Type A – Savings Account: This is similar to a general savings account, and interest earned is the same as in a normal savings account of that particular bank. This account type permits multiple withdrawals and it is advisable to open this account in case you wish to construct a house, as multiple withdrawals are possible.
• Type B – Term Deposit Account: This account type resembles a fixed deposit account where the amount is locked for a specific period of time. The interest offered is similar to the interest paid on fixed deposit accounts by the respective bank. This type of account is advisable when you wish to purchase a house, as that would be a one time withdrawal.

What if there is loss on sale of property?

In case there is a loss on sale of property i.e. the capital gains are turning out to be negative, such a loss can be set off against other long term capital gains. This loss can however, only be set off against incomes from the same head i.e. it can only be set off against incomes arising under the head “Capital Gains.” This long term capital gains can arise out of sale of another residential property, mutual funds or equity. These assets must have been held for at least 1 year. Carry-forward of losses is also allowed by the tax department to the next year and even further upto 8 years.

What is the best portfolio mix for me?

The best portfolio mix for you after the sale of your house will depend upon whether you wish to save capital gains tax or not. In case the tax outgo is large, you should invest into another property and save this money. However, if you are not paying a large amount as taxes or are unable to invest in another residential property, you can consider other options depending upon your age profile and your risk appetite.




So decide wisely and invest your money into that asset category which gives you the returns and mental peace that you are looking for.







Stay informed with the latest Business News on Times of India. Explore updates on International Business, gain insights with Financial Literacy tips, and make use of Financial Calculators. Don’t forget to check the list of Bank Holidays in 2025, including Bank Holidays in January.


Ready to Master Stock Valuation? ET’s Workshop is just around the corner!