Cash received as gift from sale of mothers house in accout

Tax queries 328 views 3 replies

Vinod

34 Points Joined February 2014

Here's the situation. My mother bought a flat in 1997 for around Five Lakhs & cash we paid around 10 lakhs. & at present after the redevelopment we sold it for 80 lakhs in 2016. Out of that we have already re-invested for 30 lakhs on New Flat + cash payment of Rs.13,.00 lakhs. Now the most Tricky part

My mom Wants to give me the remaining amount which shall be around 39 Lakhs for me to buy a flat by Transferring to my Bank Account. Will the Transfer of amount in my NRO account attract Capital Gain Tax? What can be done to save Capital Gain tax or Exemption.

1. Whether Mummy can execute Gift deed and transfer the said amount in my Name so that I Can purchase flat with the same amount?

2. If mummy is buying can my name is also included with a small amount of investment from my side and buy Jointly

3.Whether she directly pay the amount on my behalf to the builder?

I would really appreciate your Advice and Opinion in this

Warm regards

Vinod

Replies (3)

Rocky

85 Points Joined October 2013

Gross LTCG = 34,34,000 (after applying inflation index)

less : section 54 exemption (your investment in another house)= 30,00,000

less : section 54EC exemption = 4,34,000

Net LTCG = Nil

tax payable = nil

For exemption under seciton 54EC you will have to purchase capital gains account scheme which are basically bonds of NHAI and RECL which pay interest @ 6% p.a. You cannot sell the house or the bonds for a period of 3 years to avail the exemptions. In case you do sell them before 3 years the amount will become taxable again.

After those 3 years that money can be transferred by your mother to you which wont be taxable under section 56(2).

I Hope i am correct and it helps you.

I have assumed that you wont be disclosing the 13 lakhs received as cash payment and the selling price was 67 lakhs (80lakhs - 13 Lakhs)

P.S. You have mentioned there was re development that took place. If that payment was made with a receipt then that can also be used to decrease LTCG. Disclose complete costs incurred

Mihir

Wealth Manager

5293 Points Joined December 2008

As per the data given by you, there is no LTCG since you have already invested the required amount in another property. Your mother will have to file ITR for the FY 2015-16 and show the capital gain workings.

Thereafter, your mother may prepare a gift deed and transfer the balance amount in your bank.