capital gain on jointly owned property

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RASHMI

UNEMPLOYED

47 Points Joined November 2012

A and B are husband and wife.

Both jointly own a property.

All the Emi's are deducted from B's bank account.

Initial contribution was also majority of B.

For first 2 years of property , B was earning so the benefit of interest was completely given to B in ITR , nothing to A.

Afterwards, B stopped earning but EMI deduction was happening from her account but amount was credited to her bank account by A for paying emi. The benefit of interest in ITR was given completely to A in those years. Nothing to B

After 5 years the property is sold.

Please let me know in whose ITR capital gains should be shown. Also in whose ITR benefit of interest till the date of sale to be shown?

Replies (4)

Ruchika Somani

Coaching and Practice in Tax Audit Law

4429 Points Joined June 2018

Capital gain will depend upon in whose name the property is so if property is in name of both 50% then 50% gain in bith hands and accordingly the ratio will be as per agreement of purchase.

Secondly interest deduction benefit is available to that person from whose account the payment is made.

So calculate accordingly

CA Sunil Kumar

Chartered Accountant

4524 Points Joined July 2014

1. If the co-owned property is sold, each co-owner has to offer the capital gain as applicable on his share of the building.
2.Each co-owner, who is also a co-applicant in the loan, can claim a maximum deduction Rs 2,00,000 for interest on the home loan in their Income Tax Return. The total interest paid on the loan is allocated to the owners in the ratio of their ownership.