Archive / Investment Adviser (Level 2) / Capital Gains
nism-series-xb-immovable-property-ltcg-holding-period[ INVESTMENT ADVISER (LEVEL 2) ]
For an immovable property (such as a residential house) to qualify for Long-Term Capital Gains tax treatment, for how long must it generally be held before sale?
[ A ]More than 24 months[ CORRECT ]
[ B ]More than 12 months
[ C ]More than 36 months
[ D ]More than 6 months
Takeaway
Option A is correct: more than 24 months.
Derivation
The Finance Act, 2017 reduced the long-term holding period for immovable property (land and buildings) from 36 months to 24 months, effective from FY 2017-18 onward. A property sold after being held for more than 24 months qualifies as a long-term capital asset, taxed under the long-term capital gains provisions; if sold within 24 months of acquisition, the gain is treated as short-term and taxed at the investor's applicable slab rate instead. This is distinct from the 12-month threshold that applies specifically to listed equity shares and equity-oriented mutual funds.
Why the others fail
B — More than 12 months
The 12-month holding period applies to listed securities such as equity shares and equity mutual funds, not to immovable property.
C — More than 36 months
36 months was the holding period for immovable property before the Finance Act, 2017 reduced it to 24 months, effective from FY 2017-18.
D — More than 6 months
6 months does not correspond to any statutory long-term holding threshold for immovable property or listed securities.