Capital gain - options?

Tax queries 362 views 2 replies

Mihir

Wealth Manager

5293 Points Joined December 2008

A flat purchased on 1981 is up for sale. The member of the society is Mr. A and wants to sell the flat and share 50% of the sale proceeds with his brother Mr B who lives separately. Mr. A does not want to write a gift deed in favour of Mr B. Mr. B is not the nominee of the flat nor the owner.

Mr. A's question is how capital gains will be affect with the below two options:

1) Whether to have a single ownership of the flat for sale, and give 50% of the sale proceeds to his brother?

2) Whether to have a joint ownership of the flat for sale, and share 50% of the sale proceeds?

Replies (2)

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

A is liable to discharge the LTCG tax in his hands only, and hence he is set free to donate/ gift / give his money to anybody he wants.

Mihir

Wealth Manager

5293 Points Joined December 2008

Mr. A is only the trustee of the said flat for now. The mutation is still pending. What should be the course of action for Mr. A in order to decrease his long term capital gains? He intends to give 50% to his brother from the sale of this flat. From the balance 50% with himself, he wants to buy another flat plus make some investments.

1) transfer the flat wholly in the name of Mr. A and then sell to give 50% to his brother?

2) transfer the flat partly in the name of Mr. A and partly in Mr B and then sell to share the sale proceeds? (in this case, the long term capital gain will be shared, too, because the flat is owned jointly, right?)

Thanks