Release deed has to be duly stamped and registered
2) you are entitled to long term capital gains exemption by reinvesting capital FSI s in purchase of new flat
Holding time duration for LTCG Tax
Hi, In 2008, Myself had purchased 1 bhk flat in Mumbai for 19,00,000 Rs. in joint ownership with my father for an investment purpose. Since I was unmarried at that time, flat was purchased in joint ownership with my father. I paid 16 Lacs (15 lacs as loan) and Father paid 3 Lacs while purchasing the flat. I have cleared my home loan in 2015. I got married in 2009, Since then I started staying there with my wife, Since date of purchase, I was paying complete EMI and is paying maintenance of building till date I got shifted to bigger house (2 BHK) in 2018, From 2018 till date , Rent agreement is only in my name and all rent is being deposited in my account as well I am paying income tax on this additional income generating through rent. Now I want to sell that 1 BHK flat in Aug 2023 and planning to invest all amount in new house immediately, My dad wants to release all his rights to me. So I have following questions: 1. Can my father do release deed on 100 Rs stamp paper and allow me to sell the flat? 2. This additional share received to me vis release deed will not qualify for STCG and period of holding will still be considered from date of purchase of flat in 2008, so that I can avail the LTCG tax exemption by reinvesting all amount in purchasing new house, is my understanding correct ?
Asked 2 years ago in Taxation
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6 Answers
do a gift deed instead of a release deed
the stamp duty is Rs. 200 + 1% metro cess (on 50% value of the flat)
you need to check your purchase document
if nothing is written in it as regards the holding between the two co-purchasers, then it will be taken to be 50:50 holding despite the fact that majority consideration is paid by you and your father paid only 3 lacs out of the total sale price
when the 50% share of your father is transferred to you by way of gift, the cost of acquisition [for purpose of computing capital gains tax] will be the cost of acquisition of your father i.e. 3 lacs
and the period of holding of such 50% so gifted will be the period of holding as applicable to your father i.e. 15 years [counted from 2008] and so such 50% when sold by you will attract LTCG
You need to remain invested for the period of 3 years
1. Your father being as joint owner by the registered sale deed, he either has to execute the sale deed jointly along with you in favor of the prospective purchaser or he has to transfer his share in the property by executing a registered release deed relinquishing his rights in the property.
If he is executing the sale deed jointly along with you then he can also invest in the same house property you now desire to purchase and claim exemption from income tax over the long terms capital gains tax.
2. Your understanding is right in this aspect, it will be considered as LTCG only.
1. Since, the said flat is in joint ownership , then your father can execute a registered gift deed in your favor for making your single owner of the flat .
- The stamp duty is exempted if gift deed is in favor of blood related.
- Release deed on Rs.100/- stamp paper is not valid.
2. Yes.
Dear Client,
- Given your father's joint ownership status according to the registered sale deed, there are two options available. He can either co-sign the sale deed with you to facilitate the property's transfer to the potential buyer, or he can formally release his ownership rights through a registered release deed. This would enable you to proceed with the property's purchase. If he chooses to co-sign the sale deed with you, there's an added benefit. He can also invest in the same property you intend to purchase, allowing him to claim a long-term capital gains tax exemption over time.
- Your interpretation is accurate in this regard; the situation would indeed qualify as a case of long-term capital gains (LTCG).
