I own a residential property in my name.
My mother recently sold a flat in her name and incurred capital gain. Earlier we had intention of buying a new property. So, amount was transferred in capital gains account.
Now we do not want to invest in any new property.
Questions are,
1. Whether my mother can buy property from me by paying applicable duties, with the money from capital gains i.e does it require any arm's length transaction.
2. If above transaction is possible then is there any tax implication for me.
1 according to me your mother can buy property from you and avail exemption us 54
2 IF your mother is TRF you property than the consideration received by your mother should be 110% of consideration received
or
Stamp duty value of property on date of transfer
which ever of the above 2 is higher as per Sec 50C will be
considered as fair value of consideration received by your mother
Tax liability incurred by your mother will be
FVOC- amount computed from above provision
-(less)cost of acquisition of property-
cost of property at which LTCG has arised by your mother(property sold by your mother) has arised .(including indexation)
gross taxable amount =. xxxxx
from that gross taxable amount less exemption us 54 (LTCG amount that is invested by your mother is purchase of your property) and after that net taxable amount will be your mother tax liability.
but according to me it is not preferable to purchase a property from you because if you sell property to your mother you will incur capital gain and will incur tax liability
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