• Capital gain on selling HUF property

sir we have sold our ancestral huf residential property to third party and capital gain was applicable. so we purchase new huf residential property(flat) against it within year ON JULY 2013.. ...my grandfather is karta.Now we want to dissolve huf and transfer it to my mother as individual property in order to get CASH CREDIT from bank....will CAPITAL GAIN TAX WILL BE APPLICABLE as property is transfer to family member only
Asked 2 years ago in Property Law from Surat, Gujarat
You can either ask him to gift the same to your mother then you will not have to pay capital gain or to make a distribution by partition deed in favour of your mother only if sale deed or release deed is executed capital gain comes into play. If it is distribution of capital assets on the total or partial partition of a Hindu Undivided Family or transfer by gift or will doesn't attract capital gain click talk to the lawyer button for any doubts.
Jeshma Mohandas KP
Advocate, Kozhikode
567 Answers
1 Consultations
3.5 on 5.0
Your case is of partitial partition or in  case of gift no capital gain is applicable.that is why I asked you to go for gift deed.you must take the value as govt declared value for the same and not the market values.you can buy cash in hand and when you write in paper write goverment fixed value.slight capital must be paid if the selling amount and buying amount are almost equal or must shows it was to clear debts loss in bussiness  for treatments, you must have proofs like this  or you have bought a flat or house or land near to that value hen you can  get exemption if a huge difference is there for the difference you must pay.
Jeshma Mohandas KP
Advocate, Kozhikode
567 Answers
1 Consultations
3.5 on 5.0
1) in real estate, if you have held the asset for more than 3 years, it is treated as long term.

2)  Investment in any asset class, if held for a very short period, is taxed as short-term capital gains. Except equity, short-term gains from other assets are included in the investor's income and are taxed as per the slab rate. 

3) in your case since HUF is being dissolved within one year of purchase of flat capital gains tax would be applicable
Ajay Sethi
Advocate, Mumbai
23401 Answers
1230 Consultations
5.0 on 5.0
A. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property.

B. The following transfer is to be treated as not transfer for the purpose of computing Capital Gains:
i) Distribution of capital assets on the total or partial partition of a Hindu Undivided Family ( HUF);
ii) Transfer of a capital asset under a gift or will or an irrevocable trust except transfer under a gift or an
irrevocable trust, of shares, debentures or warrants allotted by a company to its employees under ‘Employees’ Stock Option Plan or Scheme;

Therefore the exemption under the distribution of capital assets thorough partition would be applicable within the family members

C. In this case, Capital gains tax will be imposed due to the sale happening in the short term and  HUF terminated within one year.
B.T. Ravi
Advocate, Bangalore
738 Answers
31 Consultations
5.0 on 5.0
Hi
No you will not  have an exemption and will have to pay the tax In case a transfer as you are intending to do will not attract any capital gain within one year of transfer. This will be assessed on the ready reckoner value/ Govt value of the property when it is property   valued.
Thresiamma G. Mathew
Advocate, Mumbai
1316 Answers
85 Consultations
5.0 on 5.0
capital gains tax would be applicable
Rajeev Bari
Advocate, New Delhi
1506 Answers
92 Consultations
3.5 on 5.0
1. After buying the property in the name of HUF to avail exepmtion of capital gain tax on the sale of ancestral property  by he said HUF, you shall have to keep it for at least 3 years,

2. In the instant case, the HUF has to pay the capital gain tax if it sells it with in the said lock in period,

3. It will be prudent to disslove the HUF after 3 years,

4. However, you can gift the same in the name of your mother while dissolving the HUF within thye lock in period though the I.T. officer will initially efuse to accept it in which case ou shall have to go to tribunal against his averse order.
Krishna Kishore Ganguly
Advocate, Kolkata
12143 Answers
234 Consultations
5.0 on 5.0

Ask a Lawyer

Get legal answers from top-rated lawyers in 1 hour. It's quick, easy, and anonymous!
Ask a Lawyer

Property Lawyers

T Kalaiselvan
Advocate, Vellore
14171 Answers
128 Consultations
5.0 on 5.0
Ajay Sethi
Advocate, Mumbai
23401 Answers
1230 Consultations
5.0 on 5.0
Ashish Davessar
Advocate, Jaipur
18266 Answers
450 Consultations
5.0 on 5.0
Krishna Kishore Ganguly
Advocate, Kolkata
12143 Answers
234 Consultations
5.0 on 5.0
Devajyoti Barman
Advocate, Kolkata
5248 Answers
54 Consultations
4.9 on 5.0
Shivendra Pratap Singh
Advocate, Lucknow
2798 Answers
41 Consultations
4.9 on 5.0
Atulay Nehra
Advocate, Noida
444 Answers
15 Consultations
4.7 on 5.0
Rajgopalan Sripathi
Advocate, Hyderabad
873 Answers
43 Consultations
5.0 on 5.0
Ajay N S
Advocate, Ernakulam
1918 Answers
19 Consultations
5.0 on 5.0
S J Mathew
Advocate, Mumbai
1954 Answers
66 Consultations
5.0 on 5.0