CGT for Property Settlement

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R owns self- acquired vacant land of 2400 sft purchased 30 years back.  Recently he executed a settlement deed in favour of his wife S and elder brother N for equal share without any consideration.

N also owns an old house in another place and his wife & 2 sons are the legal heirs.

Now N due to his age and health  wants to his execute a settlement deed in favour of his younger son P for his share of the land property without any consideration.

Subsequently, if the land is sold jointly by S and P, and P invests his share of sale proceeds for a joint construction of a new apartment after demolishing the old house of his father (in which he is a joint legal heir) –

  • What is the CGT implication for N in the current year?
  • Will it be treated as Short Term or Long Term gain for P?
  • Any other implications

 

Replies (1)

Settlement of any property between relatives, by way of registered settlement deed, without any consideration; is regarded as GIFT, [in the eyes of IT act.]

So, if P invests the CG amount in any house property, of which he becomes owner; he can get the exemption u/s. 54F of the act. But without his own ownership or co-ownership, he cannot get the benefit.

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