Long Term Capital Gain on Joint Flat

I have a property in mumbai which is tenancy of trust. Agreement of this property is done in in 2009. The value of property is 8 lakhs when bought. After cost inflation index 16.27 laks. I have found a buyer for the property for 56 lakhs.

Since it is a tenancy of trust I have to pay 25% to trust. So trust has will get 14 lakhs and I will get 42 lakhs.

I am going to sign a agreement with trust that trust will get 25% of selling value.

So will have to pay Long term capital gain on 56 laks or 42 lakhs.

My second quiestion is the agreemnt is joint with my mother (first holder) and my self second holder. When we bought the property my mother has paid 8 lakhs to buy the property. So should both joint holders have to pay 50% LCT each of my mother has to pay 100% LCT.

My third question is can in invest in 54ec bonds to save LCT.

Thanks

Vishal Ved

Hey Vishal, here’s a detailed breakdown of your queries on Long Term Capital Gain (LTCG) on the joint flat and tax planning:

1. LTCG on ₹56 lakhs sale value or ₹42 lakhs (after 25% share to trust)?

The capital gain is calculated on the total consideration received from the buyer, i.e., ₹56 lakhs (the full sale value).
The 25% share to the trust is treated as an expense or cost-sharing agreement, but for tax purposes, your capital gain is based on the full sale value.
You will pay LTCG tax on your share of capital gains after deducting cost of acquisition and expenses.

2. Joint ownership and payment of LTCG tax

Since the property is jointly held by your mother (first holder) and you (second holder), capital gain and tax liability is apportioned according to ownership share.
If your mother paid the full ₹8 lakhs at purchase and both names are on the title deed, ownership percentage matters (usually 50-50 if not specified).
Both you and your mother will pay LTCG tax on their respective shares of capital gains.
If your mother is the sole contributor to the purchase cost, that cost should be apportioned to her share when calculating gain.
So, for example, if both hold 50% share:
- Mother reports 50% of sale proceeds and 100% of cost.
- You report 50% of sale proceeds but zero cost, resulting in your capital gain being higher, which may not be fair.
Ideal approach: Apportion cost of acquisition as per contribution. You may have to maintain evidence (bank statements) for proof.

3. Investment in 54EC bonds to save LTCG

Yes, you can invest in 54EC bonds (issued by NHAI, REC, etc.) to save LTCG tax on gains from sale of property.
Conditions:
- Investment limit is ₹50 lakh per financial year.
- Investment must be made within 6 months from the date of transfer.
- Bonds have a lock-in period of 5 years.
This investment exempts LTCG to the extent invested in 54EC bonds.
You and your mother can each invest separately if you both have LTCG liability.

Summary Table:

Question	Answer
LTCG on full sale value or net?	LTCG calculated on full sale value (₹56 Lakh).
Joint ownership tax liability	Tax paid by both owners per ownership %; cost should be apportioned by contribution.
54EC bonds investment	Allowed to invest max ₹50L each within 6 months to save LTCG tax.