• Regarding capital gain and buying new house

Dear Sir,

Thanks a lot in advance for all of your efforts to reply to my queries.

I have two scenarios.
Scenario 1-

1. My father is selling the land in Delhi and buying an apartment in Noida. He has some money from the capital gain of old property sale and will be investing the same in new property.
Say, we have a capital gain of 40 lac and value of the new property is 60 lac. 
Can he make me co-owner of new property and have tax rebate of capital gain i.e. 40 lac?
Can he make me the full owner of the new property by paying 40 lac as capital gain and me paying rest 20 lac?

Scenario 2-

2. My father is gifting land to me and I am selling that land, thus the capital gain of 40 lac would be in my name. I buy new property and make my wife as co-owner.
Can my wife be co-owner, if she does not put any money?
Can my wife be co-owner, if she invests some money and still I get capital gain tax rebate?
Note --> My wife, already has a flat on her name and I am the payer of that flat (loan in my name).

Some more queries, but not related to capital gain are as given below.
1. Can the seller make a sale deed now, say for 70 lac and I pay only 60 lac as of now and pay 10 lac after 1 month?
2. What are the stamp duty charges of Noida for property registration?
Asked 5 years ago in Property Law
Religion: Hindu

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9 Answers

1) your father can purchase claim joint names and make you a co owner of the flat . He can claim benefit of capital gains exemption

2) you cannot be made full owner of the house as your father would not get benefit of capital gains exemption

3) your father can execute gift deed in your name and you can purchase flat on joint names with your wife even if she does not contribute any money

4) you can pay seller 60 lakhs now abd 10 lakhs later

5) stamp duty is state subject varies from state to state

Ajay Sethi
Advocate, Mumbai
89092 Answers
6362 Consultations

5.0 on 5.0

Hi,

Scenario 1:

Yes, he can make you a co-owner of the house and claim deduction of the capital gain. He cannot make you a full owner, as if he wants to claim deduction of capital gains, then he will have to own the house, either partly or fully.

Scenario 2:

Yes, you wife can be a co-ower, whether she invests in the house or not. However, please note for the gifting of land, there may not be Income-tax on it, but there may be registration charges and stamp duty payable on such gift.

Other queries:

1. Yes, that is possible.

2. Sorry, I am not aware of stamp duty in Uttar Pradesh.

Regards,

Keerthiga Sharma

M.Com., CA, LL.B

Keerthiga Sharma
Advocate, Greater Mumbai
44 Answers
2 Consultations

5.0 on 5.0

section 54F of the Act provides that if a tax payer invests the sale proceeds received from the sale of any capital asset for buying a residential property; the long-term capital gains on sale of the property would be exempt.

2) section 54F being a beneficial provision, enacted for encouraging investment in residential houses should be liberally interpreted to include investment done in the family member name too.

3) the entire purchase consideration for propertywill be paid only by you and not a single penny contributed by you . A purposive construction of the legal provisions is to be preferred as against a literal construction. Further, even if the provisions of section 54F are literally constructed, there is nothing in the section to show that the house should be purchased in the name of the tax payer only.

4) The Delhi High Court observed that section 54F does not require that the new residential property should be purchased in the name of the tax payer; it merely says that the tax payer should have purchased / constructed a ‘residential house’.

5) hence your father would be eligible for claiming exemption from long term capital gains for full 40 lakhs

Ajay Sethi
Advocate, Mumbai
89092 Answers
6362 Consultations

5.0 on 5.0

1. My father is selling the land in Delhi and buying an apartment in Noida. He has some money from the capital gain of old property sale and will be investing the same in new property.

Say, we have a capital gain of 40 lac and value of the new property is 60 lac.

Can he make me co-owner of new property and have tax rebate of capital gain i.e. 40 lac?

Can he make me the full owner of the new property by paying 40 lac as capital gain and me paying rest 20 lac?

To avail the capital gains tax exemption he has to invest the entire money in the new hose property to be bought on his name or purchase jointly with you.You cannot become an absolute owner while your father invests the amount availing exemption under LTCG.

2. My father is gifting land to me and I am selling that land, thus the capital gain of 40 lac would be in my name. I buy new property and make my wife as co-owner.

Can my wife be co-owner, if she does not put any money?

Can my wife be co-owner, if she invests some money and still I get capital gain tax rebate?

Note --> My wife, already has a flat on her name and I am the payer of that flat (loan in my name).

The Income Tax Act has laid out exemptions under Section 54 and Section 54F to help taxpayers save tax on capital gains.

Exemption under Section 54 is available on long-term Capital Gain on sale of a House Property.

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

Only ONE house property can be purchased or constructed.

Starting FY 2014-15 it is mandatory that this new residential property must be situated in India. The exemption shall not be available for properties bought or constructed outside India to claim this exemption.

This exemption will be reversed if you sell this new property within 3 years of purchase and capital gains from sale of the new property will be taxed as short-term capital gains

Some more queries, but not related to capital gain are as given below.

1. Can the seller make a sale deed now, say for 70 lac and I pay only 60 lac as of now and pay 10 lac after 1 month?

If the seller would agree to take the balance money at a letter time when you may give it , there should not any problem to this effect.

2. What are the stamp duty charges of Noida for property registration?

It may be enquired locally as the same differs from one state to another

T Kalaiselvan
Advocate, Vellore
79250 Answers
1618 Consultations

5.0 on 5.0

Q1. Suppose my father pay 40 lac (capital gain) and I pay rest amount (20 lac) , Can we both be joint owner and my father having tax benefits of capital gain?

Yes you both can be joint owners.

Q2. Suppose my father pay the full amount of flat and still make me co-owner, will he be able to have tax benefits in this case as well.

He can very well make you as co-owner despite funding the entire money by himself for the purchase of this property.

We will be paying registry charges having both of us as co-owner, will there be any extra charge for this case as father and son being co-owner(I mean, any gift deed or something like that, altough we both will have names in sale deed)?

The sale deed in both of your names shall be an evidence for your purchase.

A gift deed will not be a valid document in this regard.

T Kalaiselvan
Advocate, Vellore
79250 Answers
1618 Consultations

5.0 on 5.0

Dear Client,

Period of sale and purchase of new property is imp. within 2 years,

Q1. Suppose my father pay 40 lac (capital gain) and I pay rest amount (20 lac) , Can we both be joint owner and my father having tax benefits of capital gain? -- In case ur father pays 40 and ur 30 , u both can be joint owner acc. to percentage of payment and tax benefits still available. PERIOD of sale and new house purchase.

Q2. Suppose my father pay the full amount of flat and still make me co-owner, will he be able to have tax benefits in this case as well. - Yes

We will be paying registry charges having both of us as co-owner, will there be any extra charge for this case as father and son being co-owner(I mean, any gift deed or something like that, altough we both will have names in sale deed)? - Y gift deed, better get share through relinquish deed which ever is cheaper.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

1) builder can execute registered sale deed in favour of original purchaser even if does not have OC

2) you should purchase flat after OC is issued

3) builder cannot demand transfer charges on resale of flat

4) the reason being once flat is sold builder does not have any right on the said flat

5) it is risky to but flat from seller who does not even have regs sale deed in his favour

6) seller may refuse to honour his commitment on sale deed being executed by builder in his favour and you would have long legal battle ahead

Ajay Sethi
Advocate, Mumbai
89092 Answers
6362 Consultations

5.0 on 5.0

1. Can we have simple sell agreement notarized or GPA from owner of flat (seller) in our name and when the registry is allowed then get it registered on my name. - no valid transfer effected

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

1. That may not be a correct procedure, instead you enter into a tripartite agreement with the seller and the builder which will ensure safety.

2. The builder should ensure he ensures to get the OC and the registration done on your name which shall be by an undertaking by the builder.

T Kalaiselvan
Advocate, Vellore
79250 Answers
1618 Consultations

5.0 on 5.0

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