Need Inputs on Income tax on property sale

Need Inputs on Income tax on property sale

I have a question regarding income tax liability on the sale of property.
My mother had purchased a plot 3 years before for 15 lakhs. However, it was sold recently for 14 lakhs. The sale was on a registered agreement between the buyer and my mother. The amount was deposited in my mother's bank account.

I have a joint account in the name of my wife and me. I have paid for down payment on my home, first cheque from my mother's account. I then got the remaining account transferred to my wife and mine joint account. I paid the rest of the money from that account to the builder. The house is jointly owned by me and my wife.

There is another property which I want to sell, it is in the name of my mother. I think it will be sold for 10 lakhs. its a flat, which was not completed in due time by the builder so I am getting the money back.

questions:
1. what are the tax implications that my mother is liable to file?
2. Since i got the money from my mother's account to my wife and mine joint account, do we need to file tax on it? I mean, If I am paying tax on the money that was in my mother's account, do I need to pay tax again?
3. Is there anything else that I need to know regarding this?

Asked 5 years ago in Income Tax

I will be taking a home loan from my wife's bank, for the flat that I have purchased. She is employed in a PSU bank.

Asked 5 years ago

So from your question what I getting is your mother had sold a property purchased for 15 lakhs and sold for 14 lakhs and she is going to sell another property for 10 lakh which is an underdeveloped house. But for what amount was that flat purchased or booked?

Because in your first transaction you are incurring a loss of 1 lakh so on that your mom has no tax implication she just need to claim that loss and the another property which you are selling for 10 lakh if it's also 3 years old then you can set off that loss of 1 lakh against gain in 2nd property if any.

Why would you pay tax on your mother's money since there is no gain. Also since your mom can gift you money just make a gift deed of the money you are using of your mom and you don't have to pay any tax.

There is no other issue as per my interpretation.

You can even opt for a telephone consultation via taxfull if there is any confusion.

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Naman Maloo

CA, Jaipur

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The flat was booked on a construction linked plan basis. So I was giving payment on that flat as the work progressed. I have given till date 10 lakhs but the flat is no where to be completed. So, I was thinking to get the money back.

I think in this financial year, there will be around 25 lakhs deposited in my mother's account. Can I get get the whole amount as a gift from her? Can the gift deed be made now since I already took the money in my account?

Also, since the house is brought jointly in the name of me and my wife, who will declare it in the income tax return?

My wife is an officer in a PSU bank and I just want to be thorough. Thanks for your reply, I appreciate it.

Asked 5 years ago

Dear Sir,

Hope you are doing well !

1.No tax implication as she has incurred loss on property sale.

2. No, you do not need to pay any tax.

3. Just take the money from your mother as a gift. Gift from relative are exempt u/s 56.

Thanks & Regards,

Payal Chhajed

CA, Mumbai

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In case of 2nd property in your mother's name you are only going to take back the amount you had invested so there will again be no capital gain in that.

Now let's talk about the gift thing.

If you are going to take it in your joint account and are going to invest in a property jointly purchased by you and your wife and I am assuming you will also take loan and so I would suggest to take loan in both you and your wife's name even though you are taking it from your wife's bank because otherwise it will complicate the transaction because the loan would be in her name whereas you have made part payment from joint account therefore it is suggested to take loan in joint name and distribute the gift amount equally and show it that way in your ITR. And it would have been better if you had made a gift deed on the day when the amount was transferred but nonetheless you can still get a stamp paper and prepare the deed there is no harm in that just mention that so much amount was transferred on so much date via so and so cheque number.

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Naman Maloo

CA, Jaipur

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Dear Sir,

Take the gift jointly (you and your wife) from your mother and make gift deed properly.

Show the gift amount in you and your wife ITR under exempt income.

Payal Chhajed

CA, Mumbai

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Hi,

1. No tax implication as there is capital Loss.

2.No need to pay tax.

3.Receive the money from your mother through gift. However, you shall be required to make proper gift deed.

Karishma Chhajer

CA, Jodhpur

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It is advisable that received the money jointly (husband & wife) and it will be shown as exempt income in respective ITR.

Karishma Chhajer

CA, Jodhpur

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Hi,

1. Can you please clarify that whether you are getting the money back from builder or your are selling the house to someone.

2. No, you don't need to pay tax on the money received from your mother. You can show it as gift in respective return. Gift from relatives are exempt from tax.