My brother in law purchased a Flat in Mumbai for 17 lakhs in 2010. First owner was brother in law & second owner name was of my Mother in law of the said property. My Brother in law & Mother in law gifted the property to my wife by means of gift deed in 2015 & my wife to paid the stamp duty/Registration & Local Body Tax amount to get the flat done in her name that time in 2015. She sold the said flat for 35 lakhs in April 2016. Now she is planning to buy another flat worth 30 lakhs in June 2016 by using the above money got from the sale preceeds.
What will be her capital gain Tax implications in this case ?
17 May 2016
In case of gifted property cost to the previous owner as well as period of holding for the previous owner shall be considered. Since previous owners purchased the property in 2010 it will be long term capital gain to wife. For indexation purpose cost of acquisition will be Rs. 17 lakhs but the indexation shall be given from 2015 only i.e. the year in which assessee (wife) became owner of gifted property. wife can get benefit of section 54 on purchase of another flat. Make sure that the old flat has been sold by wife as per registrar value u/s 50C.
17 May 2016
in gift case, last owner cot will be taken as cost of your wife. and period for capital gain period taken form last owner first he take the prorperty. and you can sell the property . and get benefit of indexation and u/s 54 for buying new house from sell of this house.
17 May 2016
Thanks for your prompt response. The property was transferred from my Brother in Law name to my wifes name in October'15 by means of Gift Deed. The same property was sold by my wife in April'16 for 35 Lakhs . The registrar value of the said sold property is around 33 Lakhs. Well noted long term capital Gain applicable. Capital Gain = Sales consideration - Indexed cost of acquisition. Indexed cost of acquisition = Actual Purchase price x (Index in the year of sale / Index in the year of purchase ) On 11.06.14 CBDT notifies cost inflation.Index for FY 2014-15. In JULY'15 CBDT notifies cost inflation index for FY 2015-16.
In my case indexed cost of acquisition = 17 lakhs (Actual Purchase Price ) x 1081 ( inflation index of the year property sold 2015-16. / 1081 (Inflation index of the year of acquisition i.e.in my case October 2015 ) = 17 lakhs.
In my case Capital Gain = 35 lakhs (Sales consideration ) - 17 lakhs ( Indexed cost of acquisition) = 18 lakhs.
Can you please let me know if my above calculation is correct & that my Long Term Capital Gain amount taxable is 18 Lakhs.
If the above calculation is correct then do I need to keep the above 18 Lakhs in a seperate Capital Gain amount until my wife purchases another flat worth 30 Lakhs using this amount thereby setting off the entire capital gain Tax in my case .
Also secondly we spent around 2,80,000 for Stamp Duty / registration/Advocate charges in Gift deed execution. .Will i get cost & tax benefit for this particular amount.
17 May 2016
What is the cost of purchase by original buyer, you can add expenses incurred during gift, same to be done indexation for 2016-17 since property sold this financial year I.e April 2016.
The tax payer has to invest amount of capital gains not entire sale proceeds amount of CG.The Purchase price of new property is higher than the amount of CG exemption shall be limited to total CG on sale.
New property can be purchased either one year before of the sale or two years after the sale of property. The gain can be invested on construction of property must be completed within 3 years from sale. Capital gain exemption is allowed for only one house property purchased or constructed from CG exemption.
19 May 2016
The cost of purchase by the original buyer is 14 lacs + st dty /regn charges 3 lacs - Total 17 lacs. The inflation index figures for 2016-17 are not out yet - may have them by June /July'16.. Wanted to ask if the entire 35 lacs amount which we have got from the sale preceeds of the same property in 2016 have to be kept in the capital Gain account in Bank till the time i invest it in another property which i am buying.next month ? Or a part i.e.say 20 lacs of this 35 lacs amount has to be kept in the Capital gain account till time of buying next property?
20 May 2016
For the sake of good order - The above explained exact transactions are as below : -
Date of property Purchase in Virar (Brother in Law ) – October 07, 2009 Date of property Registration (Brother in Law ) – October 22, 2009 - - 17 lacs ( Including Stamp Duty / Registration) Date of property Registration (Gift Deed in My Wifes Name ) – August 06, 2015 - My wife spent 1,18,000 for execution of Gift Deed - Stamp Duty / Regn Charges. Date of property sold Registration – April 30, 2016 - My Wife Sold the property for 35 Lacs. The buyer availed loan of 32,80,000 which was disbursed by his bank to my wife bank account on 16.05.16
With the above money my wife shall buy / register a resale property worth 30 lacs agreement in June'16 in Mira Road i.e. we are investing 30 lacs in another property using above funds.
Would like to know
1) Will there be any capital gain tax applicable if we invest 30 lacs from the sale preceeds ? 2) Does the above 32.80 lacs which we received from the buyer who had availed loan & purchased our property - Do we need to keep 32.80 Lacs in the capital Gain account till the time of buying another property in June'16 OR only a part amount is needed to be kept in the Capital Gain account to safeguard in case any tax query in future.
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