Joint ownership housing property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 February 2012 A and B are brother. C is A’s wife.

Existing Residential Flat 1: Rs. 10 lakhs ( 10years old ) no bank loan
Jointly owned by A 5 lakhs
And B 5 lakhs
( B is living in flat 1.)

New flat 2 : purched 80 lakhs today (Jan 2012)
Jointly first name B
Second name A.
Bank loan 50 lakhs jointly in order ( B , A, C) for 20 years.
( A is living here.)

Pls advise from considering all the aspect :

1.How to show Flat 1 and flat 2 in balance sheet ?
2.how to show loan in balance sheet ?
3.how to pay i.e from whose account EMI of Rs. 50000 / p.m
4. LTCG implication if flat 1 is sold.
5. how show the effect in IT return every year to above effect ?

CA PARAS BAFNA

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25 February 2012 Query -1.

Flat 1 :
Asset will be shown in the balance sheets of both A and B at cost incurred by them i.e. at Rs. 5.00 lacs in each specifying as under respectively -
Flat 1 - 50% Share
(Jointly held with B/A)
.
Flat 2: Assuming the cost as 81.00 lacs.
Asset will be shown in the balance sheets of A, B and C at cost incurred by them i.e. at Rs. 27.00 lacs in each specifying as under respectively -
Flat 1 - 1/3rd Share
(Jointly held with B&C/A&C/A&B)

CA PARAS BAFNA

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25 February 2012 Query -2. Assuming Loan Amount to be Rs 51.00 Lac.
As we have considered them equal joint holders , each one of the co-owners will show Rs. 17.00 Lacs as loan taken on the such date.

CA PARAS BAFNA

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25 February 2012 Query 3- Assuming EMI amount Rs. 51000/.

EMI should be paid in proportion of the share in the flat. It is advisable to open a
Joint Bank Account in the names of A, B &C.
Each will transfer the amount of its share in EMI to the Joint Bank A/c from where EMI will get cleared.

CA PARAS BAFNA

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25 February 2012 Query -4.

LTCG has to be calculated by subtracting the indexed cost of acquisition of Flat 1 from the net sales consideration and will be divided equally between A & B.
.
Both can get benefit of Section 54, provided the conditions as regards to the timing of purchase of new asset. Capital Gain of upto
Rs. 27.00 lacs in each case will be exempt in the hands of A and B.
.

CA PARAS BAFNA

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25 February 2012 Query-5. (In reference to Flat 2)

You have to follow historical cost concept.
Loan amount will get reduced every year by the principal repayment in the balance sheets of A, B & C respectively.
Each of them will be eligible to get interest deduction U/s 24 to the extent of Rs. 1.50 lacs (Max.) individually.

Querist : Anonymous

Querist : Anonymous (Querist)

25 February 2012 sir thank you so much.

in Flat 2 only B and A are owner.

CA PARAS BAFNA

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25 February 2012 If C is not owner then invite her to become an owner. It's not fair that, her name is used just for the sake of for creating the liability in her name.
.
If she does not happily accept the proposal- Please make consequential changes

including the following-
1. In her Balance sheet -
No need to show the Flat 2 as asset.
2. She will not make any payment in the joint Bank A/c, and will not make any payment. Will not claim interest U/s 24.
3. Consequential changes in A & B 's Balance sheet may be done in the presentation of the asset.
.

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