Capital gains tax on gifted property

Tax queries 154 views 2 replies

R (aged 71) has a vacant plot measuring 2400 ft in West Chennai which was purchased in 1975.

N (79) his elder brother has a residential property of 2600 sft with built up area of about 1500 sft in East Chennai. It was purchased in 1974 and 50% of the property was settled in favour of his wife L in 2015. They want to demolish the house and construct apartment building there.

Now, if R executes a gift deed of his vacant plot to N and afterwards N sells it and reinvests the proceeds for construction of 4 flats in the premises jointly owned by N and L what will be the implications of Capital Gain Tax for N.

Whether N will get exemption of the construction cost of all the 4 flats or for one flat only?

Whether Settlement deed is preferable to Gift Deed?

What will be the obligations of R as donor under IT Act?

What are the other charges /expenses that may be involved?

 

Replies (2)
 
 

Now, if R executes a gift deed of his vacant plot to N and afterwards N sells it and reinvests the proceeds for construction of 4 flats in the premises jointly owned by N and L what will be the implications of Capital Gain Tax for N.

Whether N will get exemption of the construction cost of all the 4 flats or for one flat only?

As such only one........ but if all 4 are on same floor, can be treated as single unit.

Whether Settlement deed is preferable to Gift Deed?

Gift Deed preferable.


What will be the obligations of R as donor under IT Act?

None, except execution of gift deed.

What are the other charges /expenses that may be involved?

Stamp duty registration charges for each transactions; and any additional unabsorbed capital gains tax liability.

 

 

Thank you very much. I have one more query on the same matter and it will be put as a separate fresh query.


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register