is capital gain tax rebate(property) gets reduced or affected if new property bought has two owners (one who had a property earlier and second having purchased property for first time)? does capital gain rebate get diminised or distributed between new owners in percentage of ownership?

Ans: Tax exemption applicable in case you transfer house property and invest gain amount in acquiring new property.

You must buy the residential house property 1 year before or 2 years from date of such transfer of property or construct the house property within 3 years from date of transfer of property.

Ans: Person can invest capital gain earned from one house property in acquiring another house property to save tax from capital gain. New house property can be in joint name.

As soon as capital gain amount is invested in new house property, Jointly acquired property will not make ineligle from capital gain exemption.

Ans: Congratulations on successfully selling your joint property and managing the proceeds wisely! It's wonderful to see you taking proactive steps towards optimizing your financial situation.

Now, regarding your question about buying a joint property to obviate Capital Gains Tax, let's break it down:

Firstly, it's essential to understand that the sale of a property typically attracts Capital Gains Tax (CGT) on any profit earned from the sale.
However, under Section 54 of the Income Tax Act, there's a provision for exemption from CGT if the sale proceeds are reinvested in another property within a specified time frame.
In your case, since both you and your wife received 50% of the sale proceeds separately in your respective bank accounts, each of you can utilize your share to purchase a new property individually or jointly.
By purchasing a joint property, you can pool your resources and invest in a new asset together. This can be a strategic move to utilize the sale proceeds effectively and potentially minimize tax implications.
However, it's crucial to ensure that the new property meets the criteria for CGT exemption under Section 54. For example, the property should be purchased within the specified time frame and held for a certain period to qualify for the exemption.
Additionally, consult with a tax expert or Certified Financial Planner to understand the specific eligibility criteria and implications of reinvesting the sale proceeds in a joint property.
Keep in mind that while buying a property can offer potential tax benefits, it's essential to consider other factors such as location, affordability, and long-term financial goals.
As you navigate this process, remember that careful planning and informed decision-making are key. Seek professional guidance to ensure compliance with tax laws and optimize your financial outcomes.
Finally, I commend you for being proactive in exploring options to manage your finances effectively. With the right guidance and strategy, you can make informed choices that align with your goals and aspirations. Best of luck on your journey!

Ans: Here's some information to help you navigate this situation:

Buyer's Perspective: The buyer is likely concerned about ensuring a clean title to the property. Having multiple owners with different ownership percentages can be complex for them. From their perspective, paying equally avoids future disputes or complications regarding ownership.

Your Options:

Negotiate with Buyer: You can explain your situation and try to convince the buyer to pay according to your agreed percentages. Perhaps offering an indemnity clause (where you take responsibility for any future ownership disputes) could help. A lawyer can help craft such an agreement.

Partition Deed: You can get a partition deed prepared by a lawyer. This deed will legally divide the ownership into specific percentages as agreed by all of you. This establishes clear ownership and allows the buyer to distribute the sale proceeds accordingly.

Capital Gains Tax:

Tax Implications Not Affected by Distribution: The capital gains tax is calculated based on the property's overall gain, not the individual distribution. You will each be liable for capital gains tax on your share of the property, regardless of the sale proceeds received.

Record Keeping is Key: Maintain proper records reflecting the inheritance and the agreed-upon distribution percentages. This will be crucial when filing your individual tax returns.

Recommendation: Consult a lawyer specializing in property inheritance and taxation. They can advise you on the best course of action considering your specific situation and local laws. They can also help with the partition deed and navigate the legalities of the sale with the buyer.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in