Capitial gain from joint property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2012 Hi
I have purshed property in 2004 with My name as first name and with my mom & dad's name as 2nd and 3rd name resp.
At that time I have taken loan and then my parents conributed 20% of total amt. The loan acc was closed back in 2007.
We want to sell that flat now and invest entrie captial gain to new house (which will cost be more then captital gain anyway).
This time we are planning to buy new flat on on my and my wife's name.
In above case will there be any tax implications of not including parents name ?

If they will have to pay captial tax then will capital gain will be calculated according to % of contribution ?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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19 February 2012 In the property purchased in 2004, the share of parents is 20% and yours is 80%..
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Capital Gains will exempt in your case but parents may have to pay tax on Capital Gains by including the same in their respective total income. If they are Senior citizens , and having lesser income than the taxable limits, the capital gain tax liability may reduce on the amount of CG, which is utilised in covering the shortfall between the taxable limit and their other income.
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Capital Gain is decided on the % of contribution basis, in case there is no specification of share in the Purchase Deed of the joint property.
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Querist : Anonymous

Querist : Anonymous (Querist)

19 February 2012 Thanks for clarification. Other CA told me that capital gain will be 2/3 and not % contribution , so just want you to confirm the same. Also share certificate we got does not mention any % contribution and has all 3 names. if it is 2/3 capital gain then can i avoid the same include just my dad's name only ,with me and my wife's name in new flat ?
Also if my dad's does gift dead after we purchase the flat to my name will we only have to pay 2% of 1/3 (assuming dad's share is 1/3 in new flat) will that help

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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19 February 2012 Let us take an example. A, B & C purchased a flat. Amount contributed by them is 80, 10 and 10 respectively.
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You are A. Is it legally correct to say that you are the owner of just 1/3rd share and not of 80% of the property?
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The answer will be -No.
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The loan amount must have been paid by you for claiming the 80% share.
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It depends upon the capital gain amount, and your personal lookout, as to include whose name or not. This will be better if you specify share of each of the new purchaser, by paying equivalently.

Querist : Anonymous

Querist : Anonymous (Querist)

20 February 2012 if my parents do gift deed before selling the flat on my name by paying 2% on 2/3 current property amt and then if I sell the flat will that save my parents from capital gain altogether ?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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20 February 2012 You are right.
If parents gift you the property by paying the stamp duty as applicable on Property Gift Deed, you can save entire capital gain.
(What is 2% of 2/3 , I could not get.)

Querist : Anonymous

Querist : Anonymous (Querist)

21 February 2012 2% is stmp duty on gift i guess on 2/3 share (assuming worst case)

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