Hi,
He can buy a new residential property to save tax. There is no issue in that.
Investing in new property to save capital gain tax
My father already owns a house in west bengal. He has recently sold a land and willing to buy a flat in Delhi to avoid capital gain tax. Can he buy the new property using the money received from sale of land, when he is already owning a house (for more than 20 years)? Need your advice please, as I was told one can't buy a 2nd property in his name under such circumstances.
Asked 7 years ago in Capital Gains Tax
The restriction is that taxpayer should not own more than one RESIDENTIAL HOUSE, other than the new asset, on the date of transfer of the original asset;
In your case, your father was owning only one house at the time of transfer.
Hi,
There is no issue and he can go ahead and buy a property in Delhi. The exemption is not available if someone is already owning more than 1 house property but in your fathers case he is holding only one property
Hope that clarifies.
Regards,
Nikhil.
Yes your father can buy second house in his name. There is no problem.
yes he can buy.
Hi. My father is holding a commercial property (book shop) as well. Would that be any problem in buying the house in Delhi? Precisely, he is holding 1 residential and 1 commercial property and wishes yo buy a flat in delhi to avoid capital gain tax (from selling a land). Kindly advise.
Asked 7 years ago
Commercial property in Delhi is not a problem to purchase another residential property to save capital gain on sale of land.
There is no issues. Commercial property is not counted for the above exemption that was explained.
Regards,
Nikhil.
Hi.. thanks. One more query. If he wants to transfer the whole money (received from land sale) to me and the new property is bought in my name alone, will that cause any tax issue for my father? Since he needs to save the capital gain tax, will this arrangement work fine, if the new property doesn't have his name? And, how will I show that as a legitimate inheritance of cash, since I am also salaried? Kindly advise.
Asked 7 years ago
He should purchase it in his name and then transfer the property to you.
This arrangement may not work. The capital gains will become taxable in your fathers hand.
However, there are 2 options- either the flat is bought in your fathers and your name jointly or he buys the flat in his name and then gifts the same to you.
However the latter will increase the cost in terms of the extra gift deed that will have to be prepared.
Hope that clarifies.
Regards,
Nikhil.
The restriction is that taxpayer should not own more than one RESIDENTIAL HOUSE, other than the new asset, on the date of transfer of the original asset;
In your case, your father was owning only one residential house at the time of transfer. Hence, there is no problem.
Holding commercial property is irrelvant.
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