Ltcg incurred on sale of a property

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

07 December 2012 I am in the process of selling my flat in Chennai. Can I use the sale proceeds to buy a house owned by my mother to avoid paying tax on the LTCG incurred on the sale? The Market value of each of these properties may differ, mother’s property being higher in ground space& building value and I do not have the extra funds to compensate the sale. Would or can government object to such transaction? In anycase she was going to do a settlement deed to transfer the property in my name.
Grateful for your expertise and guidance on the above….Thanking you….CS

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
Follow

07 December 2012 There is no restriction on getting exemption if you purchase property from your mother.
However, the only problem is that you are buying it at the cheaper price as compare to mkt value due to shortage of funds in such cases assessing officer has right to refer the valaution to valuation officer if fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such per centage as specified.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
Follow

07 December 2012 If the difference between the fair mkt value and purchase price is more than Rs. 25000 or 15% of purchase price then assessing officer may refer for valuation to valuation officer.

One more thing is that, your mother may liable for capital gain on transfer of capital asset.

Upgrade to CAclubindia Pro. Subscribe Now!

Querist : Anonymous

Querist : Anonymous (Querist)

07 December 2012 Thank You Mr Kedia.....the market guideline value of the property being sold is Rs 12000 per sq ft and a total of 596 Sq Ft is the UDS (6 flats in the area) ....and the guideline value of mother's property is Rs 9000 per sq ft with a uds of 1565(The other half belongs to brother)2 flats in the area.Both buidlings are 37 Years old. I wonder whether there would be nay objections from authorities...THnak you

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
Follow

07 December 2012 Pls tell me the total value paid by you for the property and purchase price of the property bought by you along with the mkt value.
we have nothing to do with sqr feet and all...

Querist : Anonymous

Querist : Anonymous (Querist)

07 December 2012 Thanks Mr Kedia....here is following

My property that I am selling

Bought the property in 1974 for 166000
Sale Amount in 2012 approx is 6000000
Built up area 825 Sq Ft
Area : Central Chennai Prime location

Mothers Flat Bought in 1993 - 525000
Todays Value ???????
Built up area approx 1600 to 700 Sq Ft
Area South Chennai Prime location

Both buildings are 37 Years old

Thank you...Rgds...CS