My deceased father willed his house to my mother; with her consent, we have decided to sell the house and distribute the proceeds. My older brother and myself will redevelop the house into 4-floor independent flat through a Builder and keep two floors (One each). Our younger brother and mother will receive a sum of money from the builder. My intension is to sell the flat sometime in the future and remit the proceeds to US. For the tax and estate planning purposes, I’ve following questions: 1) Should I register the flat in my mothers name and have her will it to me, or in my own name? What are some pro/cons? 2) What would be the inheritance/tax ramifications in India and US if I decide to sell in 2-3 years and my mother is still alive? 3) If I decide to keep the flat, how should I go about adding my adult son in my own will? He’s a US citizen. 4) Any other suggestions?
Hello,
1. You should register it in your own name .
2. You have to pay the tax from the income you make from selling the property .
3. You have do the mutation in your own name first and after that you execute a gift deed to your son.
Hope this helps.
Regards
1. This will not save much tax. So it is better if you get the flat registered in your name only.
2. There is no double taxation in India and if you file ITR in India then only Capital gain Tax can be imposed on you.
3. There is no such need though his citizenship is of no issue even if add his name in the title deed in which case his signature would be required.
4. Keep the flat in your sole name.
1) redevelopment agreement can be executed wherein builder offers you , your brother one floor each plus some money
2) flat can be registered in your name
3) if you sell flat after 2 years it would attract long term capital gains . On sale of property it would attract long term capital gains tax unless you reinvest capital gains in purchase of another property or NHAI or REC bonds
4) you can bequeath flat to your son by will
1) If there is will mother can change it, since mother is gifting you property there will not tax on same also, so better to get in your name only.
2) On sell TDS shall apply as Short term or long term capital gains. On inheritance there is no tax.
3.) You can register a will in favour of your son he can claim asset on your demise.
4) Sir get a MOU signed between mother builder and both son and after construction is complete get i registered by gift deed from mother in your name.
Is the short or long term capital gain based on the Circle rate/registration or on the total sale price (incl B&W) and also what are those rates? Thank you!
It based on sale price or market value whichever is higher. Sale price on which we sell which are higher then the government decided circle rates(minimum rates).
Sale price mentioned in sale deed should not be lower than the circle rate
2) long term capital gains is at 20 per cent
1. Let new flat be registered in your name because having it named in your mother's favour and then transferring it to you, will involve another procedure of transfer. So make it direct. More so when your mother, you and others have mutually decided on distribution
2. You will have to pay capital gains tax in India as property will be in India. If you sell it within 3 years, you will be liable for short term capital gains tax and above 3 years, long term capital gains tax. As the flat will be in your name, whether or not your mother is living at time of sale, is inconsequential
3. You can very well make a bequest in your Will for the flat in favour of your son. You can also gift the flat to him in your lifetime itself. Latter option is better as the Will would be open to challenge when it is put up for poof for its genuineness. Your son being a US citizen doesn't matter
4. STCG and LTCG taxes are based on market value of property or agreement value, whichever is higher. Black component can be any excess sum being paid above circle rate. LTCG tax is @20% and STCG is at 30%
1. You should get the same in your name, keeping the same on her name might attract some dispute in future.
2. Depends on the value of the flat.
3. You may make a will in his favor.
Short and long term depends on the duration you keep the money from sale proceed before investing
1. Since the property originally belongs to your mother, the development agreement should be signed by her and after selling the flat and getting the sale proceed, she should gift the said sale proceed to you by notarising an affidavit affirmint that she has gifted you the said amount.
2. In case of gifting of the amount by you mother, you won't have to pay any I.Tax.
3. Your mother shall have to register a gift deed for transferring the title of the siad flat in favour of your son.
4. By her consent you can not enter in to any development agreement by yourself since you do not own the said property. She can finally gift the sale proceed or the flat after the development is over.
1. There is no capital gain for you since you have not invested any capital in the instant case.
2. The property has been bequeathed to your mother who, after it is developed, will gift you the sale proceed or the flat. So, you shall have to start paying tax on the interest you get if you make fixed deposit of the said amount received from your mother.
1. If the property has been bequeathed in your mother's favor by your deceased father, then she is the legal owner of the property.
If she agrees to distribute the property in the manner you propose then you can go ahead with the proposed redevelopment process.
The question is about whether the property can be registered in your name or your mother's name especially for the purpose of repatriation of the proceeds.
In my opinion you may better register it on your name itself so that you dont have to wait for the property to be transferred to your name after your mother's lifetime and undergo strenuous process for transferring the same to your name.
2.If the property is registered on your mother's name you cannot sell the same and get the proceeds reptriated to foreign country.
For this the property should be tregistered on your name alone.
3. There is nothing wrong or there is no legal infirmity in making a Will bequeathing the property to your son's name even though he is a US citizen.
Is the short or long term capital gain based on the Circle rate/registration or on the total sale price (incl B&W) and also what are those rates? Thank you!
It will be based on the sale consideration amount received as per the contents reflected in the registered sale deed document