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Gift tax

Tax queries 497 views 1 replies

Vijayaraghavan R

Employee

63 Points Joined December 2010

Hi Experts

If a parent transfer their property (house in chennai) to their daughter who is married some years before (and not a dependent to them), what tax obligations are there?

If the property had to be registered will there be a difference in registration amount or it will be same as in the case of a normal sale?

Is there any tax to be paid by the parent (will the parent be considered as the deemed owner of the property)?

Will the property's value(market/fair/any) be added to the income of the receiver and tax will be applied?

Thanks

Replies (1)

Dear Vijay,
When an immovable property is transferred by way of gift to a relative (definition of relative includes any linear ascendant or descendant) such transfer is not regarded as a transfer and thus will not attract capital gains in the hands of the transferor, the parent in this case.

However the following implications follow:

1)The cost of acquisition for the child will be the same as that of the parent.
2)While selling the property the period of holding will include the period during which the property was with the parents along with that of the child .

To sum it up there will be no taxability either for the parent or for the child at the time of transfer. Taxability will arise when the property is sold. For further clarifications you can read sec47 along with sec 56(2)(vii).

i hope i have been of some help.