We have sold a flat in July 2019. (registered on name of my mother in Mar 2012) . We are purchasing a new flat but plan to register it jointly on my name and my wife's name. Payment of new flat will come from sale of old flat and home loan. Pls suggest that LTCG will be applicable on this and how to save it ? Regards
Yes sir LTCG will be applicable.
It would be better if you include name of your mother as co owner or purchase bonds of the amount of LTCG to save capital gain tax on save and use remaining amount to purchase flat in your and your wifes name.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
Hi,
Hope you are doing well !!
You can claim an exemption from LTCG, under section 54 of the income-tax Act if the LTCG is reinvested in a new residential property located in India within the specified time frames. Where the new property is purchased, the gain is required to be reinvested either within 1 year prior to sale date or 2 years after the sale date. Where the new property is constructed, the time period prescribed for the reinvestment is within 3 years from the date of sale of the original asset.
However, the law does not clearly say that the new property must be bought only in the name of the seller and not on anybody else’s name. Hence, there are interpretations that Joint ownership can be acceptable but exemption can be limited to the share of ownership.
Alternatively and/or additionally, you can invest the capital gains of up to Rs 50 lakhs in bonds of NHAI or REC, within six months of its accrual and get the exemption u/s 54EC
Please note that in order to claim exemption, you need to invest the capital gain amount if a house property is sold. However, in case of sale of a land, entire sales consideration needs to be invested.
To calculate the long-term capital gains tax payable, the following formula is to be used:
Long-term capital gain = full value of consideration received or accruing – (indexed cost of acquisition + indexed cost of improvement + cost of transfer), where:
Indexed cost of acquisition = cost of acquisition x cost inflation index of the year of transfer/cost inflation index of the year of acquisition.
Indexed cost of improvement = cost of improvement x cost inflation index of the year of transfer/cost inflation index of the year of improvement.
Hi,
In order to avoid capital gain, ideally you should buy the new home in your mother's name.
However, if you can't do that and buy it in your and your wife's name, then also you can claim the exemption from capital gain. However, this could be litigative.
Hello,
Yes, LTCG would be applicable.
Your mother will get the exemption by investing in the new house property even in your and your wife's name.
I hope this answer satisfies your requirement.
Regards,
CA Hunny Badlani
Yes you can save capital gain but you need to enter the name of mother as co-owner.
Hi
Yes,LTCG will be applicable on this transaction.You can claim the tax benefit,but it is advisable to have your mother name as co owner.
Hope it helps
