• Buying the property jointly(co-ownership)

My mother-in-law has a unutilised funds which she wants to invest in buying residential house. Also, I have recently earned long term capital gains after selling a non-agricultural land. Can I and my mother-in-law jointly buy a new residential property. Can I be the co-owner in the said property with my mother-in-law. My mother-in-law will contribute about 80% amount and rest 20% will be contributed by me in buying property. Will I get the tax exemption on amount of LTCG which  i will invest in residential property.
Asked 4 years ago in Property Law from vadodara, Gujarat

1) you can buy new residential property jointly with your mother in law

2) you can be co owner of said property with your mother in law

3) LTCG is exempt for an individual or HUF on sale of a residential house property, if such gains (not the whole consideration) is utilised to purchase or construct another residential house. It should be noted that the new house should be purchased within one year before or two years after the date of transfer. In case of construction, the new house should be constructed within three years from the date of transfer. Exemption will be limited to the capital gains or the cost of the new house, whichever is lower

4)LTCG is exempt for an individual or HUF where it is realised on sale of any capital asset, not being a residential house, if the net consideration (not merely the gains) is invested in purchase or construction of a residential house. The timeline for purchase or construction is the same as mentioned above. However, to avail this benefit, the assessee should not own more than one house other than the new asset on the date of transfer. As per the recent clarifications made in Finance Act, 2014, the purchase of house property to claim such exemption has been restricted to one residential house property situated in India. Exemption in this case will be proportionate to the amount invested in relation to the net sale consideration.

Ajay Sethi
Advocate, Mumbai
58467 Answers
3534 Consultations

5.0 on 5.0


1. There is no harm in buying a new residential property jointly with your mother in law.

2. You can be the co-owner in the said property with my mother-in-law once the purchase is completed.

3. Under Section 54 – Any Long Term Capital Gain, arising to an Individual or HUF, from the Sale of a Residential Property (whether Self-Occupied or on Rent) shall be exempt to the extent such capital gains is invested in the

a)Purchase of another Residential Property within 1 year before or 2 years after the due date of transfer of the Property sold and/or

b)Construction of Residential house Property within a period of 3 years from the date of acquisition.

Provided that the new Residential House Property purchased or constructed is not transferred within a period of 3 years from the date of acquisition

4. Budget 2014 has introduced an amendment to Section 54 and from Financial Year 2014-15 i.e. Assessment Year 2015-16, exemption under Section 54 is available if the amount is re-invested in 1 Residential House situated in India.

5. Your tax exemption would be proportionate to the share of your investment in the property.

S J Mathew
Advocate, Mumbai
2389 Answers
110 Consultations

5.0 on 5.0

Definitely you can buy a new residential house with your mother in law.And you can be the co owner for the house purchased.

The tax exemption will be up to the 20% investment of your share in the sale consideration and you can avail the benefit with in one year after the actual sale of your property.

A. Maria Stephen
Advocate, Kanyakumari
17 Answers

4.3 on 5.0

1. If you invest the entire amount you received on account of the said sale of agricultural land in purchase or construction of a residential house, you will be exempt from paying income tax,

2. This investment has to be completed within the period prescribed in the I.Tax Act.

Krishna Kishore Ganguly
Advocate, Kolkata
21342 Answers
545 Consultations

5.0 on 5.0

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