Hi My mama (my mom's brother)wants to gift me 60 lacs which he got from selling a house on which LTCG is appliacable on 45 lacs. But we want to save LTCG Tax on the same. How is it possible? 1. We don't want to explore the 3 year LTCG bond . 2. Can My mama buy a new house in his name and Gift me later?If yes then do he need to keep it for a specific period before gifting it to me. Or Can we buy a house Jointly with my mama ??Is it possible to save LTCG this way?and what points can we put in the deed so that I will be the absolute owner of the house after my mama,making sure that his legal heirs don't claim the rights of the house. Also, Please suggest if some other way is possible. Thanks in advance..
1. There are judgments which have emerged which say that the tax payer can invest the sale proceeds in purchase of a residential house and he will get ltcg tax benefit even if the new house is registered in name of his relative
2. Will share it in a while
best option is for uncle to buy house in his name to save on LTCG
2) uncle can after period of 3 years execute gift deed in your favour for flat purchased in his name
3) in alternative flat can be purchased in joint names
4)uncle can execute will bequeathing flat to you on his demise
Yes, your mama can buy a new house and gift the same to you. That will save your mama Capital gain tax. There is no specific period for waiting to gift the property to you. He can do so after a month from the date of purchase.
If you sell the property at a profit in less than three years, then short term capital gains tax shall be applicable. On the other hand if you sell the property after three years, then a capital gains tax of 20 per cent shall apply after indexation. The government gives you the benefit of indexation, because of inflation. There is an indexation calculator that you must use. For example, while the property purchased in 1980 may have gone up, so has inflation. Hence, you need indexation to arrive at the exact calculation for paying capital gains.
However, you can avoid paying capital gains tax by doing one of the following:
a) Reinvesting sale proceeds in another property You can reinvest the entire sales proceeds in another residential property. Please note, it is residential and not commercial property. This has to be done within a 2-year time frame. So make sure that after you sell, you begin your hunt for a new property immediately. b) Construction of another property The sale proceeds can also be used to construct another residential property and the leeway one gets is three years and not two years. This again has to be dome within the stipulated time frame, to give you the ability to save on capital gains tax.
Dear Client,
Gift of movable things ( money jewellery etc ) don`t bear stamp duty as gift deed not required, but gift of immovable property cost 5 % stamp duty,
To save LTCG, it is suggested to invest in new property and than gift it. After purchase, he can gift immediately, or he can directly purchase in your name. no big deal. Just mention clearly who made the payment.
If in joint ownership than after purchase, Mama should release his share in you or execute the WILL that after his death, his share will bequeath in you.
Once gifted with Registered gift deed the property belongs to you. Bond was a good option. But you can even exercise any of options stated above.
1) Yes, if you don't want to go for bonds than you can purchase flat in joint name and later on ask your maternal uncle's to provide you gift deed on your name. At the time of don't show how much shares ratio are you taking.
You may purchase a property in joint name and he may gift the property or make will in your favour.
Gift will be immediate but will will take time as per the conditions.
Buying a house jointly with him where he invests the entire amount will bring proper relief as desired.
Your Uncle would have invest the said amount in another residential property within a period of 2 years from the date of sale of property.
If the sale proceeds are used to construct residential property, then the time period is 3 years from the date of sale.
Your uncle would have to get the property in his own name, in order to save STCG.
He can leave a will in your favour bequeathing te said property in your name after his death, and you won't have to pay stamp duty too.
