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Cap gain exemption for 2 property

Tax planning 66 views 1 replies

deepak kumar

Management account assistant

52 Points Joined September 2013

Dear Expert

There is case where A person named Ram who purchased a property of INR 42.5 lac price in 2020 and property is proposed to sell now of INR 1.04 cr

Out of this 1.04 Crore , 80 lakh will be used to purchase residential property. Whether there will be any capital gain here ?

2nd question whether new property purchased will be on the name of Ram or he can purchase the new property in joint ownership with his mother or wife?

Regards

Deepak

Replies (1)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9014 Points Joined December 2011

A question about capital gains tax and joint ownership! Capital Gains Tax: - *Capital Gains*: The difference between the sale price (₹1.04 cr) and the purchase price (₹42.5 lac) is the capital gain. - *Exemption under Section 54*: Since Ram is using ₹80 lakhs from the sale proceeds to purchase a new residential property, he can claim exemption under Section 54 of the Income Tax Act. Capital Gains Calculation: - *Capital Gains*: ₹1.04 cr - ₹42.5 lac = ₹61.5 lac - *Exemption*: ₹61.5 lac - ₹80 lac (used for new property) = -₹18.5 lac (no capital gains tax payable) Joint Ownership: - *New Property Ownership*: Ram can purchase the new property in joint ownership with his mother or wife. - *Tax Implications*: The tax implications of joint ownership will depend on the individual tax status and income of the co-owners. Key Considerations: - *Time Limit for Exemption*: Ram should purchase the new property within 2 years from the date of sale of the original property to claim exemption under Section 54. - *Other Tax Implications*: Consider other tax implications, such as stamp duty, registration fees, and potential wealth tax implications. Recommendation: 1. *Consult a Tax Professional*: Engage a tax professional or chartered accountant to ensure accurate tax planning and compliance. 2. *Claim Exemption*: Claim exemption under Section 54 for the capital gains tax. 3. *Joint Ownership*: Consider joint ownership with Ram's mother or wife, but evaluate the tax implications carefully.

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