As described in Wikipedia, Capital Gains Tax (CGT) is a tax on capital gain, the profit realized on the sale of a non-inventory asset that was greater than the amount realized on the sale. The most common capital gains are realized from the sale of stocks, bonds, precious metal, or property. In Nepali, we call it Labhaansh Kar (लाभांश कर). Not all countries implement a capital gains tax and most have different rates of taxation for individuals and corporations.
In a simpler phrase, Capital Gains are the profits that an investor realizes when he or she sells the capital asset for a price that is higher than the purchase price. Capital Gains taxes are only triggered when an asset is realized, not while it is held by an investor. An investor can own shares that appreciate every year, but the investor does not incur a capital gains tax on the shares until they are sold.
Formula: Sale Price – Purchase Price = Capital Gains Amount
Note: This formula assumes the sale price is higher than the purchase price. If an investor sells an asset for less than he or she paid, this is called a capital loss, and no tax is owed.
If the land and building is owned for a period less than 5 years – 5%
If the if the land and building is owned for a period more than 5 years – 2.5%
(If the building is owned and resided for a period more than 10yrs., it does not fall within the definition of Non-Business Chargeable Assets hence, It’s not taxable.)
Mr. Ram purchased a house for Rs Fifty lakhs on 2070/01/01.
He sold the same house on 2074/01/01 for Rs Seventy lakhs.
Capital Gains tax on such house shall be calculated as per below:
Sale Price – Purchase Price = Capital Gains Amount
70,00,000 – 50,00,000 =20,00,000
Since the house was owned for less than five years, capital gains tax @ 5% Rate on such gain amounting Rs. 1,00,000 (5/100 * Capital Gains Amount) should be deducted by land registration office. This is the advance tax and Mr. Ram should adjust this with the total tax liability by submitting the income tax return.
Note: If the house was owned by Mr. Ram for more than 10 years and stayed in there for continuously or intermittently, then it would not be categorized as a non-business chargeable asset and capital gains tax would not be levied.
If the house was owned for more than 5 years and came under the definition of non-business chargeable assets than the capital gains tax would have been levied @ 2.5% Rate which will be Rs. 50,000 (2.5/100 * Capital Gains Amount).
To know more about capital gains tax, Visit Inland Revenue Department website
Real Estate in Nepal has been one of the main sector absorbing a large chunk of bank lending. We all know, it is also one of the fastest and easily scalable business in Nepal’s scenario. Demand and supply of house, land, apartment in urban Nepal has brought this new industry into its existence and that is online property buying and selling market. As a number of people are migrating to metro cities and global brands and organisation being established in Nepal, the demand of Real Estate is growing higher. To meet up with clients’ tailored requirement, online portal is a technological gift.
Online portal works in a favor of both parties- Buyers and Sellers. It is serviceable to a mediator as well as people working as a Middle Man in this industry on a commission basis. Following are five Real Estate companies serving their customers/clients and doing Online Real Estate business in Nepal.
Hamrobazaar.com is a FREE online classified portal which enables individuals as well as companies to list a wide variety of new or used product via internet. Hamrobazar believes that Internet is an effective promotional vehicle as well as a communication channel that connect buyers and sellers. Hamrobazar helps to list your products for free.
Currently, there are 6132 properties including land, house and apartment listed in hamrobazaar online portal.
Lucky Group, a business house with a varied interest in manufacturing, trading and service sector since 1980, seeks to establish a strong presence in the realty sector. The Realtors was built to create highly engaging, personalized web experiences for customers with evolving needs whilst on the site.
1 Ropani is another online Real Estate business portal that aims to provide service to growing Real Estate need of Nepal. Following are their four services and few unique selling point:
GharBazaar is an online marketplace for those who want to make a deal in their properties directly with the seller and buyer. Moreover, it is a bridge between buyer and seller. You can start promoting your property as a free listing or you can choose a premium service with a nominal fee. Your property will be displayed in a featured list (HomePage).
Housing Nepal aims to become a one-stop destination for anyone seeking information on Nepalese Real Estate and related professionals. The purpose is to provide an open hub for property seekers and sellers using ICT (Information and Communication Technology) to engage in dialogue that may help facilitate the best Real Estate deals for prospective clients.
The online portal is a blessing to someone who is new to a city, someone who doesn’t have contact with a local broker or have any friends or family living around in a new city. It saves your time and money. Having said that, the way companies are mushrooming in the name of real estate agency and business house, the only ones to sustain are those having bigger vision and mission.