Capital gains exemptions on jointly owned property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 April 2014 A residential property owned by Mr.X was transferred by way of settlement to his spouse Mrs.X. The deed specifically states that Mr.X has transferred 50% of his share as a gift. The property was subsequently sold.
(1) Will the LTCG be computed with respect to 50% share each in the hands of Mr.X& Mrs.X ?
(2) Mr & Mrs. X jointly purchased 2 residential properties from the proceeds of the sale. If LTCG is computed separately for each of their share - can each of them claim exemption u/s54 w.r.t to 1 residential property each ?
(3) Can each them invest in capital gains bonds to the tune of Rs.50 lacs each & claim exemption
(4) There is a provision under Sec. 27 on deemed ownership that states that if an individual transfers house property without adequate consideration to spouse, then the transferor would be deemed the owner. Is this applicable only for Income from house property or for LTCG also ?

Harsha goyal

Harsha goyal (Expert)
Follow

20 April 2014 As per section 27 Mr. X will be deemed to the owner of the property and hence the income from such property will be taxed in his hands including the LTCG. Since he his liable to pay tax only he will get the tax benefit. Exemption for investment in bonds will be available only to the extent of his share i.e Rs. 50 lacs.

Querist : Anonymous

Querist : Anonymous (Querist)

22 April 2014 Thank you for the clarification but would provisions of sec.27 apply even if Mr.X has settled only 50% of his share in the property to Mrs.X, thereby retaining 50% of his share ?

Harsha goyal

Harsha goyal (Expert)
Follow

23 April 2014 Yes it is applicable irrespective of share of transfer

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now