Buying a new house after selling an existing

Dear Sir,

Hope you are doing well !!

He 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.

-It is not mandatory to buy house only in the name of the seller.

- Yes, you can be primary and he can be secondary member.

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, he 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, he needs 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.

- New house should be in the father's name i.e. first name should your father's name and second name should be yours. To avail exemption, it is mandatory to buy either solely in his name or as co-owner in which he should be the primary owner.

Hi

No. It is not mandatory to buy house in his name. However, it should be funded from him to the extent of his capital gains. He can claim the capital gain exemption for reinvestment in residential house property.

Hello Sir,

It is advisable to purchase the new house in the name of father only to get full capital gain exemption.

Otherwise, it is subject to litigation.

Also, if you planning to purchase the house in joint ownership, it is better that your father should be the primary member.

Yes he can buy the new house as a co owner.

There is no such requirement that he needs to be the primary owner.

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

Thank you

Hello,

To claim the exemption u/s. 54/54F for buying a new house property, there is no compulsion that the new property must be bought in the name of the seller only. The seller can buy the new property in the name of his spouse or children.

I hope this answer satisfies your requirement.

Regards,

CA Hunny Badlani