Exemption under section 54 for a joint property

Tax queries 1085 views 5 replies

S Nagar

Finance Professional

76 Points Joined September 2012

Dear Respected Experts,

I have sold a residential property for 40 lacs and my wife a separate residential property for 10 lacs. Sale proceeds are deposited into two separate LTCG account 'B' ( TDR) . We have decided to buy a residential property for 50 lacs. My questions are:

Should we clealry mention our shares - 80% for myself and 20% for my wife in the registry of the property, in order to claim exemption under section 54. Can we still claim exemption without mentioning the share percentage in registry. Which is a better and safer approach ?
Can I add name of my son in registry and still claim exemption under section 54. My son is an earning adult.
In my LTCG account , I have received an interest of 4 lacs ( also declared in my ITR). I need only 40 lacs to buy property. Will bank allow me to withdraw this interest part also and transfer to my bank account. ideally this is my income (also declared in ITR) , so It should be transf
Are banks within their rights to ask for documents to prove that a property is being bought by me .What doucments ( other than form C,D) bank normally ask before allowing withdrawal from LTCG account.

Thanks,

S Nagar

Replies (5)

Mihir

Wealth Manager

5293 Points Joined December 2008

Both, you and your wife, will have to invest in another property to save LTCG tax. You may buy one property having both of you as co-owners of the same residential property. The interest earned from capital gain account is taxable. And banks usually ask for documents before issuing any cheque for withdrawals. But it is better to ask the banks what documents they will ask for.

praveen

Chartered Accountant

6971 Points Joined September 2007

Originally posted by : S Nagar

Dear Respected Experts,

I have sold a residential property for 40 lacs and my wife a separate residential property for 10 lacs. Sale proceeds are deposited into two separate LTCG account 'B' ( TDR) . We have decided to buy a residential property for 50 lacs. My questions are:

Should we clealry mention our shares - 80% for myself and 20% for my wife in the registry of the property, in order to claim exemption under section 54. Can we still claim exemption without mentioning the share percentage in registry. Which is a better and safer approach ?

NOT REQUIRED, EXEMPTION CAN BE CLAIMED IN CASE BOTH THE NAMES ARE THERE IN THE DEED

Can I add name of my son in registry and still claim exemption under section 54. My son is an earning adult.

YES THAT SHOULD NOT BE A PROBLEM

In my LTCG account , I have received an interest of 4 lacs ( also declared in my ITR). I need only 40 lacs to buy property. Will bank allow me to withdraw this interest part also and transfer to my bank account. ideally this is my income (also declared in ITR) , so It should be transf
Are banks within their rights to ask for documents to prove that a property is being bought by me .What doucments ( other than form C,D) bank normally ask before allowing withdrawal from LTCG account.
YES BANKS HAVE THE RIGHT TO ENQUIRE IF THE AMOUNT WITHDRAWN IS FOR THE PURPOSE OF INVESTMENT

Thanks,

S Nagar

CA Nitin K. Varshney

FCA DISA CCA Peer Reviewer (ICAI)

616 Points Joined November 2011

Dear Nagar ji,

u cn buy the same property in both name and claim the exemption in both individuals. there is no problem at all in it. Dont add the name of your son in registry, coz u cn nt claim exemption if registry is in another name.

Tribhuvan Aditya Singh

Student as well as Self-employed

3710 Points Joined September 2007

i would like to here refer to the judgement of delhi high court in case of CIT vs. Kamal Wahal (2013) 351 ITR 4.... the judgement says that assessee can claim exemption u/s 54F even if property registered in name of wife, where wife has not made any contribution in such purchase........ so in your case also you can add name of your son in the registration papers, no problem with that.