Ancestral property sold, purchased new house in wife's name

- You will be deemed as owner of the new property purchased in the name of wife and will be eligible for exemption of capital gain.

Hi

Yes, you will be eligible to claim exemption under section 54. No tax shall be payable for capital gains. Show the capital gain calculation in your ITR and thereby claim the exemption.

With relation to ancestral property and flat in the name of wife you won't be required to pay any tax as you have invested the entire amount but you need to show it in your income tax return. Since you have gifted the property to your wife you will be deemed owner of that flat.

Since your yearly income is above 3 lakh and you are a senior citizen and not a super senior citizen your slab rate starts at 3 lakh and since your income is above 3 lakh you need to file income tax return.

What about the capital gain mentioned in point number 1 regarding the flat purchased by you in vizeg it is also earning a capital gain of around 19 lakh.

If you need any help in return filing you can contact me.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Hi

Yes, you will be eligible for capital gain exemption under sec 54.You have to declare sale transaction in ITR under capital gain section and claim exemption there.

Hope it helps

Dear Sir,

Yes, you can take the benefit of exemption section 54.

Yes, you are supposed to compute the capital gains on sale of both the property and claim exemption on the new house purchased.  It is advisable to make the agreement and registry in joint name.  The AO can disallow the claim if the new flat is not in your name.

You need to compute  capital gains as under : The gains earned by you will be long term capital gains The capital gains would be sale price less the indexed cost of acquisition.  The cost would be the actual cost as incurred by you to buy that property.  IN case the property was bought before 2000, the Fair value as on 1 April 2001 may be adopted as a cost of the property.  Indexation is a cost inflation index which is notified by the Govt.  . It is done to adjust for inflation over the years. This increases one’s cost base and lowers the capital gains.

• Capital gains earned by selling the property would be exempt from tax if such gains have been used for purchase within one year before or two year after the date of transfer of property or construction of a new house or has purchased a site and constructed a house thereon, within a period of 3 years after the sale on the new house purchased. You can claim exemption on the new house acquired.

You will have to file the tax return declaring the capital gains  and exemption claimed.

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Hi

If it's agriculture rural land then no tax is payable on its sale. 

Gift to son is exempt from tax, so no tax liability arises in your hands or in your mother's hands for money transfer as gift. 

Hope it helps 

Since you are saying it's located in a small village I am assuming it is a rural agricultural land and not an urban agricultural land and if that's the case then neither your mom nor your brother's have to pay any tax on such transaction. But all of you have to show such transaction under exempt income.

Thank you

If the property is a "rural agricultural land" according to the income tax act, there would be no tax liabilities for any of you.

However, if it's not a rural agricultural land, your mother shall be liable to pay capital gain taxes. You and your brothers shall not be liable to pay any taxes.

According to the income tax act, rural agricultural land means agricultural land in India, not being land situated—

(a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand; or

(b) in any area within the distance, measured aerially,—

(I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or

(II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or

(III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh.

Explanation.—For the purposes of this sub-clause, "population" means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year;

Rural agriculture property is exempt from tax therefore no tax in the hands of mother and money given to the four sons will be treated as gift and not taxable in their hands also. Please confirm the nature of agriculture property i.e. rural or urban.

Dear Sir,

Agricultural land in Rural Area in India is not considered a capital asset. Therefore any gains from its sale are not taxable under the head Capital Gains.

Agricultural land in Rural Area in India is not considered a capital asset. Therefore any gains from its sale are not taxable under the head Capital Gains. The definition of agriculture land in rural area has been provided in the law elaborated below for reference.

Definition of Rural Area – from AY 2014-15 – Any area which is outside the jurisdiction of a municipality or cantonment board having a population of 10,000 or more is considered Rural Area, if it does not fall within distance(to be measured aerially) given below – (population is as per the last census)

2kms from local limit of municipality or cantonment board

If the population of the municipality/cantonment board is more than 10,000 but not more than 1lakh

6kms from local limit of municipality or cantonment board

If the population of the municipality/cantonment board is more than 1lakh but not more than 10 lakh

8kms from local limit of municipality or cantonment board

If the population of the municipality/cantonment board is more than 10lakh

Further, to claim exemption one of the condition is such land was used by the family for agriculture purpose.

IF the above conditions are satisfied your mother will not have a tax liability on sale of land. Further, there is no tax liability on the gifts made by a mother to children.  Even you brothers don’t have a tax liability on receiving the money.  However adequate documentation should be maintained to prove that it is a gift money.

Dear Sir,

No, you are not liable to pay any capital gain tax.

Yes, you will be eligible for capital gain exemption u/s 54 .