Sir, I am nearing the age of 60, I have sold my 20 year old flat now and investing in a new flat but with my son's name this year itself. Will it attract any income tax issues, since investment is in son's name? Please advise?

Ans: Section 54 provides that in case person transfer house property and invest gain amount in acquiring new property, capital gain will be exempt.

Person 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: Hi Alok
Buying a plot is not considered as reinvestment and eligibility is on buying or constructing a residential house.

In this case if you construct a house on the plot then you could map the capital gains from the sale of the ancestral house against the cost of construction of the house on the plot.

Also, as you have sold the house in March 2023, you would need to open a Capital Gain Accounts Scheme (CGAS) account with any nationalized bank on or before the due date for filing your tax return. The deposit of the capital gain amount in the CGAS account would be treated as reinvestment for the moment.

You need to note that this CGAS account amount has to be utilized for construction within 3 years from the date of sale of the ancestral house.

In case you are not depositing the amount in CGAS account or reinvesting in any eligible assets before filing tax return (of course before due date) then you would need to pay tax on the capital gain portion

Ans: Tax implications - Before the chawl goes into redevelopment:-

Rental income: If you receive rental income from the house until the redevelopment, this income will be taxed in your hands and you need to show it in your ITR and pay tax on it.

Tax implications - Once the chawl goes into redevelopment:-

Capital gains: The transfer of the old house for redevelopment will be treated as a sale, and any long-term capital gains arising from the transaction will be taxable at 20% after considering indexation. However, you may be able to claim an exemption under Section 54 of the Income Tax Act, 1961, if you purchase a new residential property within 1 year before or 2 years after the sale of the old house.

Rental income: If you rent out the new flat, you will need to declare the rental income in your tax return.

It is important to note that the above is just a general overview of the income tax implications of the redevelopment of property. It is advisable to consult a qualified tax professional to get specific advice based on your individual circumstances.

Disclaimer: The information provided in this response is for general information purposes only and should not be construed as tax advice. You should consult with a qualified chartered accountant to get specific advice on your income tax situation.

Ans: 01. Since you have sold the flat in May-2024, applicable LTCG tax would be @20%, with indexation.
02. You are liable to declare LTCG in your ITR & pay tax accordingly.
03. Exact tax amount payable by you can't be calculated in absence of detailed info about your Income from all sources & Tax Savings etc.
04. you can gift your son this sale amount, who may utilize the same in a way he likes.
05. If your want to save your LTCG, you should have purchased the new flat, may be in the name of your son. In this way you would have been entitled to exemption u/s 54. There are some tribunal decisions, which have confirmed that property purchased in the name of Spouse, son or daughter (Lineal blood relations), is eligible for exemption u/s 54.
Most welcome for any further clarifications. Thanks.