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Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 02, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - May 02, 2024Hindi
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My mother had a flat in Delhi which she wants to sell and give me the money to buy a flat in Bangalore. The Delhi flat will sell for approximately 1 crore and the Bangalore flat will cost about 2 crore- for which i will take loan. I wanted to know if i want to avoid paying tax on money received from Delhi flat, should i buy the Bangalore flat in joint name with my mother? If yes- will she have to be main owner, or can i be the main owner with she being co-owner?

Ans: If you're looking to avoid paying tax on the money received from selling the Delhi flat, purchasing the Bangalore flat jointly with your mother could be a viable option. However, there are some considerations to keep in mind:

Ownership Structure: You have the flexibility to choose the ownership structure based on your preferences and tax implications. Both you and your mother can be joint owners of the Bangalore flat, with either of you being the main owner or co-owner.
Tax Implications: When selling a property, capital gains tax may apply on the profit earned from the sale. However, under Section 54 of the Income Tax Act, if the proceeds from selling the Delhi flat are reinvested in purchasing a residential property in India within a specified time frame, you may be eligible for capital gains tax exemption. The exemption is available if the new property is purchased either in your name or jointly with others.
Joint Ownership: Joint ownership of the Bangalore flat with your mother can offer several benefits, including shared responsibility for loan repayment, potential tax advantages, and succession planning. However, it's essential to understand the legal and financial implications of joint ownership, including rights, responsibilities, and potential disputes.
Consultation with Experts: Before making any decisions, it's advisable to consult with a tax advisor or a real estate lawyer who can provide personalized guidance based on your specific circumstances and goals. They can help you navigate the tax implications, ownership structure, and legal considerations associated with the property transaction.
By seeking professional advice and exploring the option of joint ownership with your mother, you can make an informed decision that aligns with your financial objectives and helps minimize tax liabilities effectively.
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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Asked by Anonymous - May 11, 2024Hindi
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Can you please suggest on capital gains as per Indian taxation laws arising in the below two queries : 1) property purchased with joint ownership, me and my wife’s name in 2015 at a cost of 64,80,000, housing improvements done for the cost of 1000000 and brokerages of 200000 paid and sold the same property at 10000000 in Dec 2023? 2) 87% of the proceeds got from the deal i.e 8700000, have been reinvested to pay 25% amount in purchasing another joint ownership property in Dec 2023, 3) I have invested in another under construction property in Nov 2023 by taking housing loan, which is on me and my wife’s name worth 1.4 cr, here the primary applicant is me only while wife is just made a Co applicant in the builder buyer agreement and also on the housing loan . So what are the LTCG tax liabilities arising from the above 3 scenarios for FY 2023-2024 and FY 2024-2025. I intend to sale off the property acquired in (2) by Dec 2024 and use that proceeds to close the housing loan for the property acquired in (3), will this sale of property be inviting any tax liabilities if the complete proceeds received from the sale of the property in (2) would be utilised to close the housing loan taken in Nov 2023 for the property in (3) ? Since in FY 23-24, I would be claiming the LTCG from the sale proceeds of 1) invested in the purchase of property in 2), and I intend to sale off this property in Dec 2024, will the LTCG claim be forfeited on the property sale in (1), should I hold this property at least for further 1 year so that sale of this property in 2) will not invite STCG?
Ans: (A). Let's first talk about F/Y 2023-24 :
You jointly sold a Property during the year for Rs.76.80 lakhs (64.80+10.00+2.00), & sold the same for Rs.100.00 lakhs.
You have jointly also purchased Property No.3 (I suppose it is Residential only), for Rs.140.00 lakhs.
You should avail exemption u/s-54 & file your ITR accordingly. Please disclose all details about sale & purchase in your ITR.
02. Now coming to the F/Y 2024-25 :
You intend to Sell Property No.2, which was acquired in 2023-24. Any Gain on Sale of it would be Short Term capital Gains & taxed accordingly.
Alternatively, you may hold this sale of property no.2 (for 2 years from its purchase) & avoid STCG
You are free to utilize the sale proceeds in a way you like, including paying off your housing Loan.
Please note to avail exemption u/s 54 only from investment in property no.3 & not 2.
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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