if a parent wishes to buy a property in the name of his/her progeny and pay the loan themselves then what are the tax liabilities for the parent and the progeny?
how will it be different if the property is purchased in the name of the parent first and then gifted to the progeny?
remember that the progeny is not spending a penny in this transaction.
Thanks!
Hi rajesh,..
The best option is to buy in their own name and thereafter gifting...
Wait buddy, i think the loan deduction (sec 80C and 24) are available to the owners of house only..
I mean, if father pays the loan amount and if the house is in the name of the child, then such deductions won't be available...
Though, i'm waiting for some experts' advice, like AMIR or ANKUR SIR can justify this....
Hi Dhiraj,
Come on Bhai, I m no expert..........
As far as this question goes -
Firstly, Purchased & then transfer or directly purchased in the name of child will not have much relevance since Sec 27 offsets this benefit (only exception is minor married daughter)
Answer will depend upon the status of Child -
If Minor,
Then Provisions of Sec 27/Sec 64 will be trigerred & Computation will be done in the hands of Parent - Benefit u/s 24 & 80C Can be claimed...Further Rs. 1,500 will also be allowed to be deducted in case of Sec 64.....
If Major,
Then Next Question will be asked whether it is a revocable transfer or an irrevocable transfer........
If Revocable then above procedure(as in case of minor except that 1,500) will be followed
If Irrevocable then Benefit of 80C & Sec 24 cannot be claimed.
Dhiraj, Amir, Thanks for the quick reply.
I was actually thinking the same way as you Dhiraj. Buying by parent and then subsequent transfer as gift to child.
lets assume that the child is a major and salaried. s/he has no interest in claiming any tax benefits. the child is only interested in any tax liabilities that s/he may have.
as for the parent, it is their wish to buy they house in the name of the child. but they wish to bear all the tax liabilities. should they buy it in their name first and then transfer or can they buy in the name of child and pay the loan?
oh and in case of gifting lets assume its an irrevocable transfer.
for the other case anyway the property will be in the name of the progeny although the parent pays the loan
CAclubindia
