Capital gain for property sold
Sashi Kumar
(Querist) 07 January 2015
This query is : Resolved
Hi Experts,
My Mother is selling her property and the funds will be given to her son's through demand draft by the buyer directly which will be mentioned on the sale deed.
After sale who will be responsible to pay the capital gain tax because the mother will not be receiving the money.
Will the mother has to pay capital gain tax or can the responsibility to pay tax be transferred to Son's. Because Son's want to reinvest the money within 2 years of sale.
Anirudh
(Expert) 07 January 2015
If the property is being sold by the mother, it is the mother who is liable to pay the capital gain tax.
Even if the son's pay the capital gains tax, it will be for and on behalf of the mother and not in their individual capacity.
It is not clear what do you mean when you son 'Because sons want to reinvest the money within 2 years of sale'. It is also not clear whether by saying this you want to indicate that you intend to get capital gains tax exemption. PLEASE COME CLEAR ON THIS.
Sashi Kumar
(Querist) 07 January 2015
Hi Anirudh: To get capital gain exemption can the son's buy real estate within 2 years under their own names with the money they receive from the sale of Mothers property.
Anirudh
(Expert) 07 January 2015
Are you proposing to buy two properties or one and would be having 50:50 share?
Whether the property is going to be purchased outright or going to be constructed?
Sashi Kumar
(Querist) 07 January 2015
Each son will receive equal share from the sale. They will then buy two separate property under their own names it will not be joint. The property purchased will be outright no construction involved.
Anirudh
(Expert) 07 January 2015
In that case you will not be able entitled to Capital Gains Tax exemption.
Your mother can using the money purchase a property in your joint names. Thereafter you can have it shared amongst yourselves. That is possible. But not in the proposed plan of yours.
In any case, what is the amount of capital gain that you are expecting? To the extent of the amount of capital gain that can be deposited in Specified Securities i.e. Bonds issued by National High Way Authority or Rural Electrification Authority for specified number of years. Thereafter it can be withdrawn.
Sashi Kumar
(Querist) 07 January 2015
Can the Mother purchase one property joint with one son and the other property joint with other son to get the Tax exemption.
The capital gain will be around 1cr.
Anirudh
(Expert) 07 January 2015
NO. YOUR MOTHER CAN PURCHASE ONLY ONE PROPERTY IN ORDER TO GET EXEMPTION FROM PAYMENT OF CAPITAL GAINS TAX. THAT IS FOR SURE.
FOR A CAPITAL GAIN OF 1 CRORE, YOU HAVE TO PAY ONLY RS. 20 LAKHS. (I take it that what you are mentioning as capital gain is The Sale Proceeds minus the indexed cost of acquisition of the property, and not the entire sale consideration itself.)
Sashi Kumar
(Querist) 07 January 2015
So the Mother can not purchase more than one property with the capital gain amount of 1cr is that correct.
Anirudh
(Expert) 07 January 2015
Please understand the position clearly.
What is sought to be saved by purchasing a fresh property is the tax on the amount of capital gain.
Therefore, if the capital gain is 1 crore, if your mother purchases a property whose cost is not less than Rs. 1 crore she can save the tax on capital gain.
With the balance sale proceeds, she can purchase another property either in her own name or in the name of any of her children, or along with her name. There is no bar.
But, if the capital gain is Rs. 1 crore, she cannot purchase two houses for a total consideration of 1 crore and then claim exemption from capital gains tax.
Rajendra K Goyal
(Expert) 07 January 2015
Consult your tax consultant and discuss in details.
Dr J C Vashista
(Expert) 09 January 2015
1. You have adequatly been advised by expert Mr. Anirudh, be grateful to him.
2. You are purchasing properties worth crores and evading few thousands rupees professional fees of the consultants using this platform?
Guest
(Expert) 09 January 2015
Consult the CA club of the Same Forum for the Best Guidance and Clarification.
T. Kalaiselvan, Advocate
(Expert) 11 January 2015
Your query, if it is real, shall be addressed very properly by a local consultant because any amount of advise or opinion given here will not satisfy you until the practical situation is understood. If the query is in academic interest, you may better refer the concerned law books/journals.
