Capital gain will be applicable or not
Mr Bhavesh Thakker (sole owner), had bought a property in Mumbai suburban area admeasuring 220 sq ft carpet area in 1997 at approx Rs 2 lacs.. His CHS decided to go for redevelopment and development agreement was signed in 2009. The redevelopment might get completed in the year 2018, Jan admeasuring 460 sq ft carpet area (approximate value expected is rs 70 lacs).
Now Mr Bhavesh Thakkers son (Mr Mayur Thakker) and his daughter in law (Mrs Priyanka Thakker) decide to buy a new flat in Dec 2017, admeasuring 750 sq ft carpet area (costing ~ rs 1 cr). (hereafter called as new flat) in joint name of MR Bhavesh, Mr Mayur & MRs Priyanka, first name being Mr Bhavesh followed by Mayur and Priyanka. In order to buy this new flat, Mayur, Priyanka & Bhavesh apply for a home loan, first applicant being priyanka. Priyanka and MAyur will pay the monthly emi. It has been decided that Mr Bhavesh will pre-pay a part of the home loan by selling his property admeasuring 460 sq ft maybe within 6 months of buying this new flat. Apart from this prepayment (by selling old property), Mr bhavesh will pay any emi nor make any other investment like stamp duty registration or margin money in the new flat. All this contribution will be made by Mayur & Priyanka.
Whether Mr Bhavesh has to pay any capital gain tax under this scenario?
Request to kindly provide detailed explanation under income tax act.
Asked 7 years ago in Property Law
Religion: Hindu
My query is mainly for the following two points:
1. Mr Bhavesh has received an additional carpet area of 240 sq ft (possession in Jan 2018) without paying any additional amount under redevelopment policy. Will this redeveloped property of 460 sq ft be considered to be bought in 2018 or it still remains bought at the original buying time of 1997?
He has already bought another property before selling this property. So will this attract short term capital gain?
2. Mr Bhavesh will not be paying anything to the builder directly for the new property, however he will be making prepayment in the home loan obtained for this property to bank. He will not be paying any EMI as he is a co-applicant in the home loan. Will this be considered as investment in another property and not attract any capital gain tax?
3. If a society undergoes redevelopment, tenants receive additional carpet area without making any additional payment. In this case, tenants have to undergo a fresh registration process (stamp duty & registration will be borne by builder). In this case, can the tenants sell this flat immediately on possession & buy a new flat/make prepayment in home loan for already bought new flat (within one year) without attracting capital gain?
Asked 7 years ago