Selling property at a loss can be financially challenging, but taxpayers can claim income tax relief by reporting these losses in their Income Tax Return (ITR) for the financial year 2026. According to Siddharth Maurya, Founder & Managing Director of Vibhavangal Anukulakara Private Limited, if a property is sold for less than its indexed purchase cost and associated transfer expenses, it qualifies as a capital loss under income tax rules. Taxpayers must provide detailed transaction information, including purchase and sale dates, acquisition costs, and any related expenses.

Capital losses can be set off against capital gains, with short-term losses applicable to all types of capital gains, while long-term losses are restricted to long-term gains. If losses cannot be set off in the same financial year, they can be carried forward for up to eight assessment years, provided the ITR is filed on time. Taxpayers should use ITR-2 or ITR-3 forms based on their income type, ensuring all transactions are accurately reported to avoid notices from the Income Tax Department. Proper documentation and timely filing can help taxpayers maximize their tax benefits during fluctuating real estate cycles.