Sold a jointly owned flat after 14 years? Here's how your long-term capital gains tax is calculated

Selling a residential flat after a long holding period can result in long-term capital gains tax, but the amount payable depends on factors such as the purchase date, sale value, indexed cost of acquisition, and ownership pattern. Here's how the tax rules apply to the sale of a jointly owned flat purchased in 2011 and sold in 2025.

Today's Q&A explains such details in response to a query by a reader.

**Question: Me and my wife bought flat in June 2011 in joint names for 21 lakhs plus brokerage, etc., and sold the flat for ₹43 lakh in December 2025. Are we liable to pay long-term capital gains tax, and if so, then how much tax do we need to pay? **

A flat is treated as a capital asset, and therefore any profit made on its sale shall be taxed as capital gains. A flat becomes a long-term capital asset if it has been held for more than 24 months on the date of sale; otherwise, it is treated as a short-term capital asset.

So you are liable to pay tax on long term capital gains arising on sale of the flat. Presuming that you are a resident of India and since that flat was acquired before 23 rd July 2024, you have two options as regards the rate at which you will have to pay tax on such long-term capital gains.

So either you can pay tax at 12.50% on the difference between sale the the sale price and the cost of the flat. Alternatively, you can pay tax at 20% on the difference between the sale price and indexed long-term capital gains.

The brokerage paid at the time of purchase is included in the cost of the flat, deducted from, and likewise any amount paid as brokerage at the time of sale is allowed to be deducted from the sale price to arrive at the net sale consideration.

Under the first option you will have to pay tax at 12.50% on 22 lakhs of long-term capital gains which comes to ₹2,75,000. Under the second option the indexed cost of the flat will be ₹42,91,304 based on Cost Inflation Index of 184 for 2011-2012 and 376 for financial year 2025-2026, respectively.

After deducting the indexed cost of ₹42.91 lakh from sale price of 43 lakh, the indexed long-term tax at, capital gains come to only ₹9,000 on which tax at 20% comes to ₹1800. Since the tax liability under the second option is significantly lower and thus you should opt to pay tax on long-termlong-term capital gains @ 20% on indexed long term capital gains.

In case you do not wish to pay tax, you can claim exemption by utilising the long-term capital gains for acquiring another residential house property within the prescribed time period.

The calculation will change depending on the ratio in which each of the joint owners, the long-term holder, has contributed for the acquisition of the flat. In case the other joint holder has not contributed anything but has only been added for succession purpose, whole of the capital gains will be taxed in your hands.