Capital Gains Tax

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This discussion explores Capital Gains Tax (CGT) implications when selling a property. The main query concerns whether the profit from selling land can be used to offset a son's property loan for tax deduction purposes. It's clarified that Section 54F allows for deductions if the sale proceeds are reinvested in new property, but the new property must be purchased or constructed in the seller's name or jointly. The son's existing property, bought with his own funds and a loan, doesn't qualify for this deduction for the father. Long-Term Capital Gains Tax is generally charged at 20% on the taxable gain after exemptions.

Sivaramakrishna MBA

Sivaramakrishna MBA (Querist)

15 February 2020 Hai dear Ones Good evening.
My cousin is going to sell his property(Land) which approx value of 45 lakhs which bought at 10 years ago for 5 lakhs.He will utilize the money for constructing of a building which land is on his wife name.
His son is having a building which bought with 18lakhs loan and 12 lakhs his own fund.
Can the father said that profit of the sold property is cleared his son Loan for tax deduction.
Pls guide me n suggest me how much of capital gain tax(maximum) may be impose with the above Values.
Thanking You All.

CA Mukesh Jain S

CA Mukesh Jain S (Expert)

15 February 2020 He can claim deduction u/s 54F for purchasing or construction of the building in his wife name. Usage of the funds is important in section 54F towards new house. Son has used his own funds & taken loan in his own name so father cannot claim sec 54F deduction for the building bought already by the son. LTCG willl be chargeable @ 20% upon the gain after claiming section 54F exemption. Deduction u.s 54F will be given proportion of the investment to sales consideration.

Sivaramakrishna MBA

Sivaramakrishna MBA (Querist)

17 February 2020 T Dear Mukhesh Jain For Your Reply.

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