Ltcg on jointly held property sale

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Niranjan A Gandhi

Others

21 Points Posted on 24 May 2014

I have recently sold my house which was jointly held by myself and my wife. The money received from the sale has been distributed equally to the two of us as that is how we had invested in the house. I plan to buy two apartments with this money: one in my sole name and another in my wife's sole name. Can each of us claim the cost of the respective apartment as deuction from the money that is received separately by us?

Thank you.

Replies (2)

Guest

Posted on 24 May 2014

As per Special bench of Income Tax Appellate Tribunal vide a significant ruling AIT-2007-205-ITAT exemption under sections 54 and 54F of the Act would be allowable in respect of one residential house only.

If the assessee has purchased more than one residential house, then the choice would be with assessee to avail the exemption in respect of either of the houses provided the other conditions are fulfilled. However, where more than one unit are purchased which are adjacent to each other and are converted into one house for the purpose of residence by having common passage, common kitchen, etc., then, it would be a case of investment in one residential house and consequently, the assessee would be entitled to exemption.

Please see link:

/forum/exemption-u-s-54-income-tax-255675.asp#.U4A4jtKSwxB

Mihir

Wealth Manager

5358 Points Posted on 24 May 2014

Both, you and your wife are sellers in the sale deed, therefore, LTCG shall apply to both equally. You and your wife, both, are required to invest in another property to save LTCG tax. So plan accordingly.