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78-Year-Old Seeks Tax-Saving Strategies for Land Sale

T S Khurana |253 Answers |Ask -Follow

Tax Expert - Answered on Nov 12, 2024

A certified management accountant since 1993, T S Khurana is a fellow member of The Institute of Cost Accountants of India. His areas of expertise are income tax, specifically litigation cases, and GST.

Since the last 21 years, he has also been providing expert advice on financial matters, including investments and diversification of funds, and wealth building in the long term to his clients.
He believes that investment in real estate is the safest way for better returns and wealth generation over a period of time.

A former chairman of the Chandigarh Chapter of Institute of Cost Accountants of India, T S Khurana has also served as member of its technical committee.... more

Question by Sagnik on Oct 30, 2024Hindi

Money

I am 78 yrs old . I own a land with my 3 brothers who aren't alive any more. They are succeeded by their children. The property is supposed to get sold at 3 crores. So I would get 75 lakhs approx. I have two sons who are working in different companies. Can you please suggest ways to save tax on the LTCG ? I am open to include my sons and my wife in the transaction if that allows to save tax. I don't want to invest in property anymore. I am posting this question for second time. Pls answer.....

Ans: 01. You are liable to LTCG on your share of sold property.
02. Involving your sons & wife won't help from i.tax point of view.
03. If you don't want to invest in property anymore, you may purchase Capital Gain Bonds u/s 54(EC) from REC or NHAI etc., up to a maximum limit of Rs.50.00 lakhs.
Most welcome for any further clarifications. Thanks.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Mr. Anil I purchased a House Plot 60X40 ft during 2001. Now I am trying to sell the plot. Pl. clarify whether I will not get any Indexation Benefit on Acquisition Cost / Buy Cost as per this new Budget. I am Retired Pvt Employee and this Plot is with me for last 23 Yrs. Pl. advise how to reduce LTCG Tax burden. K. Ravindranath , Hyderabad

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Asked by Anonymous - Aug 26, 2024Hindi

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Hi Everyone, I am planning to buy a residential land with funds from my home loan, my father's savings and money redeemed from stocks and mutual funds invested by my mother. Can you suggest a way to reduce liability on the LTCG tax of my mother. As in can we include her name in the property so that she can show full sale amount invested in property to claim exemption u/s 54F and then later on through gift deed withdraw her name from the property so that I become the sole owner which is the end goal.

Ans: 01. Please may plan to purchase the house property in joint name with your mother. She can claim exemption from LTCGs in her ITR.
02. After purchase of property, you may get her WILL Registered in your favor, so that you become the sloe owner of property after her. Even during her life, she can make a gift in your favor.
Most welcome for any further clarifications. Thanks.

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Tax Expert - Answered on Oct 30, 2024

Asked by Anonymous - Oct 22, 2024Hindi

Money

I am 78 yrs old . I own a land with my 3 brothers who aren't alive any more. They are succeeded by their children. The property is supposed to get sold at 3 crores. So I would get 75 lakhs approx. I have two sons who are working in different companies. Can you please suggest ways to save tax on the LTCG ? I am open to include my sons and my wife in the transaction if that allows to save tax. I don't want to invest in property anymore.

Ans: 01. You are liable to LTCG on your share of sold property.
02. Involving your sons & wife won't help from i.tax point of view.
03. If you don't want to invest in property anymore, you may purchase Capital Gain Bonds u/s 54(EC) from REC or NHAI etc., up to a maximum limit of Rs.50.00 lakhs.
Most welcome for any further clarifications. Thanks.

T S Khurana |253 Answers |Ask -Follow

Tax Expert - Answered on Nov 26, 2024

Asked by Anonymous - Nov 02, 2024Hindi

Money

I recently sold a piece of land inherited from my father for ?62 lakh. Since both of my parents are deceased, I am their sole legal heir. Under Section 54EC of the Income Tax Act, I am eligible to invest up to ?50 lakh in government bonds to save on long-term capital gains (LTCG) tax. These bonds offer an interest rate of 5.25% and have a lock-in period of five years. After making this maximum investment of ?50 lakh, I am left with a remaining amount of ?12 lakh. I would like to know if there is any way to utilize this remaining ?12 lakh without incurring LTCG tax on it. Additionally, I currently have a personal loan with an outstanding balance of ?10 lakh, and I am considering using this ?12 lakh to pay off that loan. Can I use these funds to close my loan without triggering any LTCG tax implications?

Ans: 01. You have sold the land for Rs.62,00 lakhs. This is the Sale amount & not Capital Gain.
02. Please work out LTCG by reducing Cost of Land from this sale amount. May be you LTCG is less than 50.00 lakhs & it serves your purpose.
03. However, I would like to suggest you to invest the amount in any residential property, which would enable you to save LTCG tax and also provide you lucrative return, instead of 5.25%, as offered by the bonds. It would also reduce LOCK-IN period from 5 to 3 years.
Most welcome for any further clarifications. Thanks.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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