Dear Sir/Madam
My mother is pension holder and senior citizen. My father passed away. Her land was given to developer and in return she got ownership of some flats in the same building. Now she is selling those flats to third party. Is the amount got through this selling will be treated as income. She did not open capital gain account. The amount is transferred to savings account. Please advise.
Regards
Ans: Here's a breakdown of the tax implications for your mother's situation:
Sale of Flats:
The sale proceeds from selling the flats will likely be considered a capital gain. Since she received these flats in exchange for her land, the cost price for calculating the capital gain will be the cost of the original land.
Tax Treatment:
Long-Term Capital Gains (LTCG): If your mother held the flats for more than 2 years before selling, the capital gains will be considered LTCG. For senior citizens (over 60 years), LTCG from the sale of any type of capital asset (including land or buildings) is exempt from tax.
Short-Term Capital Gains (STCG): If she held the flats for 2 years or less, the gains will be considered STCG. However, there's no separate capital gains account required for seniors.
Exemption for Senior Citizens:
The good news is that since your mother is a senior citizen, LTCG from the sale of the flats is exempt from tax irrespective of whether she opened a capital gains account or not.
Recommendations:
It's advisable to consult a tax advisor for a more personalized assessment. They can consider factors like the specific holding period of the flats, any applicable exemptions, and filing requirements for senior citizens.
Additional Points:
Even though LTCG is exempt, it's still recommended to maintain records of the original land cost, sale proceeds, and ownership period for future reference.
If the sale proceeds are significant, tax implications on other income sources might need to be considered while filing the ITR.
I hope this clarifies the situation!
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
