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Tax on property tax

Abhishek (software professional) (39 Points)

09 November 2022

Hello, I sold my property and gifted 55% of the money to my Uncle. He invested in Fixed Deposit.

If and How much I will be taxed , If I use the 45% property money for paying my running house loan

If and how , my uncle will be taxed?

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8 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160445 Points)
Replied 10 November 2022

Who was the owner of the house property sold?

Any share of your uncle in the property?

1 Like

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 10 November 2022

You will have to pay capital gains tax on entire capital gains computed, as I believe you are the only owner of the property. gifting of the money to your uncle won't help in saving CG tax.

1 Like

alfala haseeb (9 Points)
Replied 11 November 2022

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Abhishek (software professional) (39 Points)
Replied 11 November 2022

It was on my father's name without will(vasiyat). At the time selling we got it transfered first to my name.

No share of Uncle, neither he claimed it. I just gifted him 55% percent of money

Abhishek (software professional) (39 Points)
Replied 11 November 2022

45% - This is what I have left with & entire 45% , I will pay to the Bank for currently running House Loan Principal amount adjustments. Still I need to pay tax on this 45%(9 Lakh)?

2. 55% : So I need to pay tax on this entire(11Lakh) amount which I gifted to Uncle?

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 11 November 2022

You need to compute long term capital gains by indexing the COA. The amount of CG needs to be deducted from the sale consideration received which is required to be invested to save CG tax .f yiu are not investing it then pay CG tax @ 20% on CG computed. balance would be your tax free income and you can use it for paying your loan

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160445 Points)
Replied 11 November 2022

In simple words, you need to pay CG tax over total amount of 20 lakhs. There will be no deduction available for transferring the amount to your uncle or home loan repayment.

Moreover, uncle will have to pay tax over the gift amount of Rs. 11 lakhs received from nephew.

Abhishek (software professional) (39 Points)
Replied 12 November 2022

1. I heard if One invest the money from selling property back into buying property within 3 years, there is no tax applicable. Is it correct? please confirm

Here instead of buying new property , I am using money into already bought property(by paying for loan principal)

Isnt it the same thing?

2. 11 Lakh : I agree I need to pay tax on the gifted money(11 Lakh),

a)Uncle is senior citizen - Still he need to pay tax?

b)If I make gift deed/affidavit, still he need to pay tax?

Please answer both (a) & (b)

3. What in the applicable CG tax for my case in terms of percentage. We bought that property 30 years - so its a long term capital gain? Isn't long term capital gain tax exempted(only 10% tax), like it is in mutual fund.