capital Gain

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 January 2011 Residential Property purchase thru Power of attorney /Agreement to sell(in blood relation) is eligible for investment of capital gain which accrued from sale of residential property?

K V Subba Rao

K V Subba Rao (Expert)
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17 January 2011 Blood relationship with seller of new property does not stand in the way of claiming Capital Gains exemption

But I am afraid, mere PoA or Sale Agreement for buying new property does not entitle you to claim Capital Gains exemption. The new property should be registered in the name of buyer

Querist : Anonymous

Querist : Anonymous (Querist)

17 January 2011 i think there is a little confusion let me explain : Mr A sold property to Mr B (his brother ) & made a capital gain of Rs 15 Lakh(property got registered by B as bank financing was needed) ,now mr A purchase property from Mr B another property (same brother) ,but donot want to get registered ,want to do transaction thru POA ,sales agreement to avoid stamp duty ,how will capital gain will come into picture ,& whether payment by mr A to Mr B against agreement to sell will be treated as capital gain invested as per provisions of Income tax Act/Rules.

K V Subba Rao

K V Subba Rao (Expert)
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17 January 2011 There is no confusion

1. A sold his property to B. In this transaction, A made a Capital Gain of Rs 15 lacs

2. A will be able to get Capital Gains exemption, if A invests Rs 15 lacs in purchasing a new residential house

3. New residential house can be purchased from B or anybody on the earth.

4. For this purpose, purchase implies registration in the name of A. If property is not registered in the name of A, he (A) will not become owner.

5. If new house is not registered, A has to pay Tax on Capital Gain of Rs 15 lacs on sale of house to B. (See step 1 above)

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