1. There is no exemtpion on the money he makes gift in your favour.
2.Only the part of money which is reinvested in another proeprty gets exemption. Rest even if gifted will attract capital gain tax.
Long term capital gain
My father has a land which he wants to sell. Part of the proceeds he wants to give to me and rest he wants to invest in buying another property. Can he pay the capital gains on the part of sale proceeds and give money to me and put rest it in capital gains account to avail of benefits under the rule of reinvestment within 2 years or he has to put entire proceeds and use that to avail of benefits ?
Asked 8 years ago in Property Law
Religion: Hindu
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5 Answers
LTCG is exempt for an individual on sale of a residential house property, if such gains (not the whole consideration) is utilised to purchase or construct another residential house
2) 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.
3) your father can give you part of sale proceeds
4)If you are not able to invest the specified amount in the manner stated above before the date of tax filing or 1 year from the date of sale, whichever is earlier, deposit the specified amount in a public sector bank (or other banks as per the Capital Gains Account Scheme, 1988).
For claiming LTCG tax exemption the proceeds are to be invested fully in the property proposed to be purchase out this funds.
The amount given to you will not come under exemption. He may have to pay the taxes on that.
Mr kalaiselvan, Thanks for your response but you have confused me even more..does it mean i need to invest the entire proceeds in new property to avail of capital gains benefit or i can invest partially as well and use rest of the proceeds for some other purpose by paying capital gains tax on that portion only ? The answer from other laeyers suggest that i can do that but your answer sugfests i cant ?
Asked 8 years ago
under section 54 of income tax act(on sale of house property) you dont need to invest entire sale proceeds to avail capital gains benefit
2) you only have to invest long term capital gains proceeds on sale of residential house in purchase of new residential property
3) under section 54F (LTCG on sale of land) You can use the entire sale proceeds (received by selling a plot / land) to buy a new house or to build a new residential house.
If you use a part of the money, the deduction will be proportion of the invested amount to the sale price.
The time-frame for investment is the same as that for capital gains from residential property.
You should not own more than one residential house prior to this investment.
Exemption under section 54 can be claimed in respect of capital gains arising on transfer
of capital asset, ‘being long-term residential house property. This benefit is available only
to an individual or HUF. In this case, all the conditions as provided in section 54 are
satisfied.
A new residential house property must be purchased or constructed to claim the exemption
The new residential property must be purchased either 1 year before the sale or 2 years after the sale of the property/asset.
Or the new residential house property must be constructed within 3 years of sale of the property/asset
If you are not able to invest the specified amount in the manner stated above before the date of tax filing or 1 year from the date of sale, whichever is earlier, deposit the specified amount in a public sector bank (or other banks as per the Capital Gains Account Scheme, 1988).