My mother-in-law is selling her property (plot of land) and she wants to finally transfer the sale amount to my wife. My Mother-in-law is above 65 years, housewife. My father -in-law has expired few years back. What is the advice in terms of reducing the impact of tax from the property sale? As she doesn't want to invest in another property, will it be advisable to park the money in 54EC bonds for next 5 years and make my wife the nominee/later transfer the amount after 5 years? The sale value is less than 50 lakhs. After 5 years, when my wife gets the money as a gift from my mother-in-law, will it be taxable/considered as a source of Income for my wife? My wife is currently working .
Hi,
Yes, your mother in law should invest the capital gain amount (need not invest entire sale proceeds) in 54EC bonds for five years to get the exemption from capital gain.
Later on she can make your wife nominee or transfer the money five year later. You if need no to pay any tax on receipt of money as gifts from relatives are not taxable.
Hi,
Yes, your understanding is correct.
Later on your wife gets the money as a gift from your mother-in-law. As it will be treated as gift from relatives. So, no tax liability will arise.
Dear Sir,
Hope you are doing well.
Yes. It will it be advisable to park the money in 54EC bonds for next 5 years and make your wife the nominee/later transfer the amount after 5 years.
After 5 years, when your wife gets the money as a gift from your mother-in-law, it will not be taxable.
Gifts from relatives are exempt u/s 56 of IT act.
Thanks & Regards,
Payal Chhajed
First you will have to check whether there is any capital gain in such transaction.
If yes then only you have to invest such money and 54EC is a good place to invest money and take exemption and she only has to invest the amount equivalent to amount of capital gain and not entire sale consideration, so she can gift balance amount i.e. the amount left after investing the sale consideration in bonds to her daughter right away and transfer remaining amount after 5 years.
There will be no income taxable in the hands of your wife in relation to the gift received from her mother as she has received gift from her relative and so such transfer is exempt.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
Hi
If your mother-in-law and your wife, both don't want to make any investment in residential house property, it is advisable to invest the capital gain amount in 54EC eligible bonds.
Later, the money on maturity of bonds can be transferred to your wife. Also, your wife could be the nominee so that in case of any uncertainty before maturity of bonds, the transfer shall be done in your wife's name.
In this way, firstly there would be no levy of capital gain tax for your mother-in-law. Also, for your wife, it shall be an exempt income as gifts from relatives are exempt.
However, make sure capital gain is showed in your mother-in-law's ITR and exemption is claimed and gift is shown in your wife's ITR in year of receipt as exempt income.
Please note that investment in 54EC eligible bonds needs to be done within 6 months of sale of the property and the bonds shall be redeemable after 5 years.
Hi,
It is advisable that your mother in law invest the capital gain amount only in 54EC bonds for 5 years to get the exemption from capital gain.
There will be no tax in the hands of your wife on receipt of the money as gift from relatives is non taxable.
Regards,
Nikhil
It's ideal to invest the long term capital gains in NHAI/REC bonds. After 5 years once the amount matures, she can gift it to your wife. There is no tax on gifts.
Hi,
- Transfer the property as gift to your wife before sale and your wife can utilize the money after sale as she wants.
- Your option is also good. No it won't be taxable but draft a proper gift deed.
Thanks
Any sum recd from mother is exempted. on sale of property LTCG will be taxable or she has to invest the amt of capital gain as per 54EC bond.
Hi
Yes it can be done.But for saving tax, investment in bonds to be done within 6 month of sale. secondly ITR of mother to be filled for claiming exemption.
Better it is advisable for mother to gift property itself ,draft proper gift deed for it. After that your wife can sale and utilise the funds ,way she want.
