Hi Lawyers, My father has a capital gain of 15-20 lacs. My wife is working in a bank and gets bank paid accommodation until and unless she or me doesn't own a property in the same city where her bank is. We are planning to buy a house to utilize the above capital gain and avoid 20% tax deduction. But my father is retired and doesn't have any running income. Can we buy a house in my father's name (not include mine or my wife's name in the property) and we being the co-applicant's in the loan my father's property? This way we can avail the lease of the bank also and we can buy a property also in our city. Please tell us if this is legally correct and is possible? What other way do you suggest the best way to invest. My wife can get employee loan with half the EMI from her bank. Request your guidance. I am ready to hire someone also for this consultancy., if someone is interested, please write here.
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Yes, you can buy the house in your father's name, but the loan agreement would also be in his name.
You or your wife can be the guarantors and can also pay the EMIs, but your father would be the primary loan applicant. If the proceeds are invested in this way, he would not have to pay capital gain on the sale.
Also state as to when the said sale was made?
Dear Client,
To exempt capital gain, father have to purchase property in his name or in joint ownership or in your name. Or you can contribute to purchase property in father name as GIFT. Than he will be sole owner and lease will survive.
Or execute MOU with father that you and your wife lending him to purchase house.
Yes you can buy a property in name of father and be joint applicant in loan. Though bank can insist on you only as coapplicant as your wife is no blood relative though banks allow immediate relatives to be also coapplicnats.
Yes it is legally correct and possible.
Father can also invest in government bonds and securities to avoid capital gain tax.
Flat can be bought in joint names of you and your father . Your wife can also be added
father can invest his capital gains and you being co owner can apply for bank loan
@Siddharth: Sale was made in November 2018.
Amount received as sale proceeds has to be invested within 2 years of such sale.
The amount received can still be invested by your father to avoid paying capital gain.
You can purchase new flat within period of 2 years
Yes you can buy the house
Dear Sir,
- Be informed father being retired person can not become liable to loan which will not allow him to be co partner legally as it will create conflict of liability.
- Retired person generally doest not get home loan untill have something to mortgage.
-Reference to other loan option, your wife shall have to discuss with bank authority only as every bank has own set rule in terms of benefits given to its employees.
- You are advised to connect any CA despite of talking to any lawyer here. Pertain to legal angle you can approach me anytime at Gurgaon court.
Regards
Vivek Arya
The new property should be purchased in period of 2 years.
If your wife is to avail loan from her bank then she has to be a co-purchaser in the sale agreement, otherwise how will the bank sanction the loan?
It is permissible u/s 54 of income tax act that the family members of the assessee by whom capital gains tax is payable, can be included in the sale agreement for sake of convenience
Just because family members are included as co-purchasers is no ground to deny the capital gains tax exemption
But then there will be logistical issue because how will the newly purchased flat be collated to its actual owner
So what can be done is, you and your wife can become co-purchasers in sale agreement where it will be clearly written that you both are being included only as a part of family arrangement and for convenience sake and no ownership right is being conferred on the co-purchasers
Then your wife can pass on the loan amount to the seller on behalf of your father and it will be stated in sale agreement that the EMIs for the loan will be repaid by her or you and such emi shall be considered as gift to your father (which is also permissible u/s 56 of income tax act)
In this way you can continue with bank accommodation and avail capital gains tax exemption
Yes you can be co applicant along with your father to get Finance from the bank on the property means you along with your father and your wife will be the applicant in the bank and there is no problem in this transaction
The new house property can be bought in the joint names of all the three also or even your father can invest in the property you are likely to purchase by utilising this capital gains amount and can claim exemption.
Co-applicant arrangement is also ok.
Your father can directly fund the purchase of a house property which you and your wife have proposed to buy it jointly on your names alone and the he can invest the capital gains amount and claim LTCG income tax exemption, it is not necessary he has to buy the new property on his own name also.
@T Kalaiselvan : This is what I want. But what I have read over the internet is that to claim Capital Gain Tax Exemption under sEction 54 of Income Tax, the property shall be purchased in own name. Then how can my father fund this purchase without having his name in the property? Can you please give reference how this is possible?
Your father should be one of the Co owners of property purchased out of sale proceeds of other property
then only father can claim benefit under section 54
There are lot of judgements to confirm this.
You may search for the answer through internet more thoroughly, you will find what I have mentioned.
If need be you may contact me on further issues, shall clarify you.
Capital gain tax will undoubtedly be claimed by person from whom the said property is purchased nd funds went from his account
You father can fund property in your name and still can get benifit of capital gain tax . There are number of judgements on same.