New Delhi, July 18 -- Many homeowners assume that claiming indexation automatically reduces their tax bill when selling a property. After all, indexation adjusts the purchase cost for inflation, lowering the taxable capital gains.

However, a simple example shared by Dev Patel, Financial Advisor at 1 Finance, suggests that this may not always be the most tax-efficient option.

In a post on X, Patel explained that for properties purchased before 23 July 2024 and sold during FY 2025-26 (Assessment Year 2026-27), the tax law allows eligible resident individuals and Hindu Undivided Families (HUFs) to compute long-term capital gains tax in two ways-20% with indexation or 12.5% without indexation.

To explain the difference, Patel used the exam...