Sale of residential property by co-owners

Tax queries 566 views 3 replies

Girish Chobdar

Articles

34 Points Joined December 2009

Helllo Every One,

Have following queries regarding Capital Gains arising on sale of Residential Property by the Co-owners

1. A & B are co-owners (50-50 each) to a residential property. Now they are about to sale the Property. So Can both the Assessee invest the proceeds of their share in the new single residential property in their joint Names to claim exemption U/s 54 of the IT Act?

2. B & C are Co-owners (50-50 each) to a residential property. Now they are about to sale the Property. So can any one of them can claim the capital gains wholly or both have to share it equally compulsorily? If only one can bear the capital gains then is their any legal formality to be done or can be done mutually by both the co-owners?

Please gauide me through ur replies and also give reference to some case laws to the above case........

Thnx

Replies (3)

Neha sharma

1257 Points Joined February 2012

The Share of Capital Gains of each partner needs to be calculated separately

For claiming exemption of Capital Gains u/s 54, it is not mandatory to invest in their Joint Names.

Deepak Parsai

Future CA

623 Points Joined December 2008

In my opinion, yes you can take new house in joint name and even on your family member name and you have to calculate capital gain separately for a and b in their ownership ratio.

Prateek Agarwal

Sr. Executive - Finance & Accounts

1732 Points Joined February 2011

1. A & B cap gains need to be computed separately according to there ratios. Then as per sec 54, they have to invest their cap gains proceeds in to a new house property. When they have invested in the new house, the house can be in thoer joint names and their respective investments can be considered u/s 54

2. For B & C, One cannot bear the whole capital gains on oneself once he is a joint owner. It is only possible if the other gives up his right in the old property in favour of the other. But that would also lead to cap gains (better, give that part as a gift). Once B or C is the complete owner of the house, then he will be liable to pay cap gains singly.