Long term capital tax exemption from sale of joint property

Tax queries 239 views 6 replies

Hello experts, I have a question around long term capital gain from sale of joint property.

I am in process of selling my residential house in City X which is jointly registered between me & my mother. So the questions I have are:

1. Can both me & my mother buy property each in our respective names (seperately) and we both be eligible for exempltion under section 54? 

My understanding is that both me & my mother can buy seperate properties to claim exempltion.

2. I have another property in City Y which is jointly registered in mine & my wife name. Will there be any issue when I am claiming exemption for my portion while  buying another property (re-investement from sale of  above property in City X)?

My understanding is that, upto 2nd property is allowed to claim exempltion under section 54.

So in the end. After the sale of property in City X, my mother will be re-investing her full share to buy one property & I will be re-investing my full share to buy one property (along with 1 another property jointly owned by me & my in City Y). And overall there will be no tax for me to be paid from sale of property. Please confirm.

Thanks in advance.

(City reference is just an example to distinguish 2 current properties)

Replies (6)

1. " My understanding is that both me & my mother can buy seperate properties to claim exempltion.".......Correct

2. "My understanding is that, upto 2nd property is allowed to claim exempltion under section 54."........ Correct

3. "And overall there will be no tax for me to be paid from sale of property. Please confirm."

Yes, Subject to first property sold is house property, also new properties purchased within specified time period. Also subject to amount of capital gains invested in the new house properties individually.

Investment is being made by joint owners only in one property so that satisfies section 54 - No, we will be making seperate investments. My mother will be re-investing her full share to buy one property & I will be re-investing my full share to buy another property


 

No Sir... seperate investments in seperate properties

Hello.. can you confirm if understanding is correct - My mother will be re-investing her full share to buy one property & I will be re-investing my full share to buy another property.... Seperate investments in seperate properties. 

" My mother will be re-investing her full share to buy one property & I will be re-investing my full share to buy another property.... Seperate investments in seperate properties."

Correct. Both independently can get exemption u/s. 54, by investment in separate properties.

Thank you sir


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