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Which is better for a house property - gifting or selling

kalyanaraman (educationist) (34 Points)

25 April 2016

My sister has a house and she wants it to give it to me (good sister, that is!!). She is considering TWO options, namely,

Selling it to me, for a consideration
Gifting it to me

I would like to know what will be the pros and cons of each of the options, from tax point of view, for both her and me.

Any help will always be appreciated. Thanks.

Regards

Kalyanaraman Subramaniam

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CS Advocate Abhishek Goyal (M Com FCS LLB M-AIMA ) (13949 Points)
Replied 26 April 2016

In case she decides to sell it to you she will incur capital gains liability which will be calculated by substracting indexed cost of acquisition (assuming it is a long term capital asset) from sale proceeds. Capital gains tax is flat 20%.

However in case she decides to gift it to you there will be no capital gains but gift deed will be necessary. In both cases stamp duty will have to be paid. In case of sale stamp duty is paid by the buyer of property.

In case of gift there will be no capital gains in her hands and no implication of section 56 in your hands since any gift in cash or in kind of any amount from a relative is exempt.