• Tax on Joint ownership house property

Husband -wife are joint owners of 2 properties Say Property A and Property B, purchased via their 2 joint accounts in different percentage amounts. Now they have sold Property A for 21 Lakhs and Property B for 88 Lakhs. The purchaser of property B has deducted TDS u/s 194IA on 88 Lakhs fully in the PAN of Wife (Rs.88000 full tds on PAN of wife). These properties were sold to fund a single joint property say Property C for Rs. 1.54 Crore. Rs. 1.10 Crore is paid from wife's first name joint account and also Wife (PAN) has deducted Rs. 1,10,000 TDS on behalf of Property C seller, rest 44 Lakhs tds Rs.44000 is deducted by Husband PAN. and paid by his first name joint account. Sale deed of any property does not specify the ownership percentage. Sale proceeds of Property B has been received by Wife for Rs. 71 Lakhs and Rs. 17 lakhs by Husband in their respective First name joint accounts. Kindly guide the Tax implications for both sale of properties.
Asked 5 months ago in Capital Gains Tax

- If the respective shares of the co-owners are definite and ascertainable then share of each co-owner in the property shall be included in the total income. If both the properties are funded independently by husband and wife using own sources of funds then both will be treated as owner basis on the percentage of investment in the property. If the property is funded by either of the spouse and the name of other spouse is added for any reason then the spouse who has funded the property is treated as owner of the property and capital gain will be calculated in the hands of that spouse only irrespective property is purchased from joint accounts. 

 

- Exemption of capital gain is available u/s 54

 

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Vivek Kumar Arora
CA, Delhi
4408 Answers
527 Consultations

5.0 on 5.0

Hi

 

In case of absence of ownership percentage provided in the deeds, the basis of capital gain taxation would depend upon how the purchase of the property was funded. Although wife may b first name joint holder for an account, the husband may have deposited the entire funds in that account. 

 

Capital gains would be taxable in ownership percentage based on funding for purchase. This is irrespective of how TDS has been deducted by the buyer.

 

We may discuss the issues more in detail with complete facts of the case and advise accordingly.

Lakshita Bhandari
CA, Mumbai
5638 Answers
763 Consultations

5.0 on 5.0

Both husband and wife will be owners depending on the investment they have made in the property. The deduction of TDS on any particular PAN would not determine in whose hands income will be taxable. The proportion in which sale proceeds are received would also not be determinative. The amounts have to be allocated between them based on their funding in property. 

 

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Prerna Peshori
CA, Pune
40 Answers

5.0 on 5.0

Sorry the questions is bit long but If both have invested in property and both are joint then tax needs to be paid by both and the buyer has made a mistake by deducting TDS in only one name.

 

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Thank you

Naman Maloo
CA, Jaipur
4008 Answers
64 Consultations

5.0 on 5.0

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