My wife had made an agreement to buy a house in July 2014 , and paid a advance amount of 75% of the value of the house. The agreement was of a joint ownership , myself and my wife. The money invested on the advance amount was from my savings. Mean time, she had disposed off her landed property in Oct 2016, and wants to invest the money in the above said property, and avail the exemption on the long term capital gains tax . Is this Possible to avail the tax exception in the above case. Can this be considered , as she had taken a loan from me to pay off the advance amount and on sale of her property, she repay my loan and make an out right purchase of the new house.. The new property is scheduled for delivery in May-June 2017.
Hiii
as per Income Tax Act you can claim exemption from capital gain tax if Within a period of one year before or two years after the date of transfer you invest in new property thus in your case time limit not match i.e. Oct.2016 and July 2014, thus you cant take benefit of exemption from tax in above case.
Dear Sir,
As per section 54 and 54F of the Income Tax Act, 1961, you can avail exemption from long term capital gain tax if you have invested the amount of capital gain tax/sale proceeds within a period of one year before or two years after the date of transfer of old asset. However, in your case you have invested before beyond one year period and accordingly we are sorry to inform that you cant take benefit of capital gain exemption.
Please feel free to call/revert incase you need any clariifaction on the above.
Thanks and Regards,
Abhishek Dugar
CA CS B.Com
Hello Sir,
You cannot set off the tax liability as you had purchased the house property in July 2014 and sold your existing property in Oct 2016 which is more than 2 years. You could have done it if the time gap is less than 1 year.
Have you got the agreement registered with the authorities. ?
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Let me clarify further my question. I have made only an registered agreement on July 2014. The property is yet not registered in our names so far. We expect the property will be registered only during MID 2017, when the ownership (SALE) will be registered. Please clarify, in the above situation, can my wife avail the Capital gains exemption. Please confirm. ( with the view that NO builder ever delivers the property with in 2 years of the agreement date ). Please confirm. IF NOT: Can we CANCEL the above agreement and make a fresh agreement for the property only in my wife's name NOW. Is it required to make fresh transaction of money for the new agreement, or can I convert the original payment made during JULY 2014, for the new agreement. Please confirm.
If your query is not answered u can mail at modani005@gmail.com
Hello Sir,
Its difficult to prove even if you change the agreement beacuse the AO may also proof of all payments you have done to the builder. In that case he will automatically come to know that you have booked the property in the year 2014.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP