Reinvestment to avoid capital gains
This query is : Resolved
14 July 2015
Hi,
We have a plan to construct a three floor building on a land that belongs to my grandfather in Bangalore. The investment for the construction would be from me and is the money obtained out of the sale of another piece of land, so I would like to avoid capital gains on the sale of this property by showing an investment back in the residential building being constructed.
After construction I would be owning a part i.e. one floor of the building and I am looking for the best method to get this done. I was advised that the best way to do this would be to enter into an agreement with my grandfather ( which would be registered ) showing the investment from my side and after that my grandfather could gift a part of the building being constructed against my name which would avoid a heavy stamp duty and registration charge while ensuing the capital gains is not taxed as there is a reinvestment.
Can you kindly confirm if this is the right method and also if I would have independent ownership of my portion at the end of the construction?
Regards,
Arvind
We have a plan to construct a three floor building on a land that belongs to my grandfather in Bangalore. The investment for the construction would be from me and is the money obtained out of the sale of another piece of land, so I would like to avoid capital gains on the sale of this property by showing an investment back in the residential building being constructed.
After construction I would be owning a part i.e. one floor of the building and I am looking for the best method to get this done. I was advised that the best way to do this would be to enter into an agreement with my grandfather ( which would be registered ) showing the investment from my side and after that my grandfather could gift a part of the building being constructed against my name which would avoid a heavy stamp duty and registration charge while ensuing the capital gains is not taxed as there is a reinvestment.
Can you kindly confirm if this is the right method and also if I would have independent ownership of my portion at the end of the construction?
Regards,
Arvind
14 July 2015
Get your portion(undivided) of the land gifted to you, this will save stamp duty. Then invest in construction this will save you from capital gains and you will be owning a flat.
For other portions enter in to construction agreement.
For other portions enter in to construction agreement.
14 July 2015
Thank you both so if I understand this right my grandfather would need to gift a portion ( undivided ) part of the land to me and then we would need to jointly enter into an agreement for construction between us.
Does this entitle me to independent ownership of the portion of the flat post the completion of construction?
The only part I am not clear is when my grandfather should gift the part of land to me. Can this be done anytime after the start of construction or should this be done even before plan approval?
Does this entitle me to independent ownership of the portion of the flat post the completion of construction?
The only part I am not clear is when my grandfather should gift the part of land to me. Can this be done anytime after the start of construction or should this be done even before plan approval?
14 July 2015
It can be done before start of construction.
14 July 2015
Thanks.. the reason I asked this was because if the gift deed is done before the start of the construction then the plan approval should be also done with joint owners?
If this can be done after the plan is approved then it would be easier and hence the query.
If this can be done after the plan is approved then it would be easier and hence the query.
14 July 2015
Yes do it after plan approval.
14 July 2015
I am told by the lawyers that the sub-registrar will not register any property (land in this case) which is not properly demarcated by metes and bounds and hence the gift deed cannot be made for undivided property.
Is this true?
Is this true?
14 July 2015
It is a legal matter raise your query in lawyers club.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- GST on export of services and Input Credit
- ITC temporary reversal and reclaim
- TDS U/S. 194NF
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- GST ON EXPORT COMMISSION
- Stock difference tax applicable on composite rate or normal rate
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding einvoice taken on nil rated sales
Trending Online Classes
CAclubindia
