Tax arising from relinquishment of property

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rishi arora (Querist)
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20 March 2015 Sir, I own a flat jointly with my brother. I had paid all the money for the flat by cheque from my account. Now my brother wants to relinquish his share in the property. Will there be any tax in this transaction. I am living in the flat and do not have any other residential property or house in my name. My brother has another house registered in his name and is living in it.

Who will be assessed for tax and what kind of tax.

Amol S Joglekar

Amol S Joglekar (Expert)
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20 March 2015 Since you have paid the entire money for the flat, you are the absolute OWNER of the said flat. In the relinquishment deed mention these facts....that the name of BROTHER was put for the family convenience and that he does not OWN any % or share of the said property.
Under such circumstances, there will not arise any income tax liability under capital gain.....

rishi arora

rishi arora (Querist)
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20 March 2015 Sir, thank you for your reply. But the sale deed for the flat has already been executed in the names of me and my brother. So, my brother must be the owner of 50% of the property. Would it then be possible to write in the relinquishment deed that he does not own any % or share of the property.

Amol S Joglekar

Amol S Joglekar (Expert)
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20 March 2015 Most of the times, in order to SAVE the stamp duty, some transactions are done the way they are not supposed to be done. Anyway, I am NOT blaming anybody... Now that sale deed is executed in both the names (rightfully so), no any purpose to make a relinquishment deed.

Better would be, let each one show 1/2 capital gain in each case.

rishi arora

rishi arora (Querist)
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20 March 2015 Thank you. But in buying the flat there were no capital gains involved and I am not willing to sell it any time as I am living in it. I only wanted to know whether relinquishment deed will be better or gift deed as relinquishment deed will save stamp duty. Is relinquishment deed in favour of siblings also not taxable if done without consideration

Amol S Joglekar

Amol S Joglekar (Expert)
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20 March 2015 In relinquishment deed, the recital part should contain the facts of the case... giving why and how the brother's name was put at second place in sale deed, in spite of the fact the brother did not invest any of his money...
Now therefore, this relinquishment deed is made at xxxxxx on xxxxxxx...

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