Long term capital gains for joint ownership

Tax planning 131 views 3 replies

Aniket

Others

37 Points Joined August 2013

I am a co-owner in house property (Residential apartment) with below details.

1. The said flat was given to us for no consideration by builder under redevelopment agreement in 1993

2. The sale agreement for the same was done in Sept 2016 where co-ownership appears as,
1. Father 2. elder bro 3. younger bro (This sequence of names appear on the land records, same was used for flat sale agreement)

3. The sale proceeds for the flat were Rs. 66Lakhs

4. Considering 200rs/sqft construction cost, LTCG works out to be apprx 52Lakhs

5. We plan to buy another flat with below co-ownership pattern,
1. Younger bro 2. Younger bro's wife 3. Father 4. elder bro

6. The flat we're planning to purchase would cost apprx 66.5 Lakhs of which 25 Lakhs will be funded via home loan

Now questions,

1. Can all 3 of us claim full exemption under section 54? (Seciont 54F should not apply as this is house property to house property, right?
2, Do we need to define share of each joint owner in purchase agreement of flat being purchased?
3. Do we need to pay 52Lakhs from sale proceeds and only rest can be availed thru home loan?

Thanks for the answers.

Replies (3)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

197032 Points Joined July 2016

1. Yes, but slightly less than FULL. (True)

2. Without any defination, it will be equally owned.

3. No need.

Aniket

Others

37 Points Joined August 2013

Thanks! That was crisp clear :)

Further question,

1. Can all 3 of us claim full exemption under section 54? (Seciont 54F should not apply as this is house property to house property, right?
<Your answer> 1. Yes, but slightly less than FULL. (True)

<Follo-up Q> If Payment of 66.5Lakhs is structured such that father pays 14L, elder bro pays 14L, younger bro pays 14L and all 4 jointly avail remaining as loan, in that case all can claim full tax exemption as individual shares would automatically get defined in proportiong to their respective contributions? Correct?

Thanks again!

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

197032 Points Joined July 2016

Theoretically, everything is perfect, but practically, AO may sometimes add that little fraction of capital gains when the exact ownership ratio is not defined (here it comes to about 26.1%, to be more accurate.)