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LTCG reinvesting in the name of son for exemption

C R (32 Points)

09 May 2023

Good Day.

My mother sold her flat in dec 2022.

To avoid LTCG tax, she needs to invest in property. She wants to invest in a property with my name as joint owner.

She will pay the entire cost of the new property of 55 lacs as reinvestment of LTCG.

My question

1. Is it necessary that this investment needs to be in joint names with her ? I read it in one of the forum of this site that in one assesse friendly verdit,it was upheld that reinvesting in son s name is eligible for LTCG exemption as all other conditions were complied with and since son has a direct relationship with assesse ( mother). Is this a legally acceptable stand ?

How far is this true and valid as I have not been adviced by a few CAs whom I interacted with.

I would appreciate the guidance and ready to contact anyone if required.

Thanks

Chetan Rana

crana66 @ gmail.com

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7 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (176818 Points)
Replied 10 May 2023

Legally it is valid, but law is not interpreting it directly, need to go for appeals at higher levels.

1 Like

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C R (32 Points)
Replied 10 May 2023

Thanks..does that mean that I can go ahead and hope that no such issue arises and in case it arises,than to go for an appeal ?

I forgot to mention earlier that the assesse here ( my mother ) is a senior citizen. Not sure if this status of hers can have any favourable treatment from the authorities considering that all other procedural compliances are adhered to.

Thanks

sabyasachi mukherjee (27529 Points)
Replied 10 May 2023

Legally it is valid.

1 Like

C R (32 Points)
Replied 10 May 2023

Thanks. I would like to hope that this is a known stand. Since I did not get this input from a CA when I asked for suggestion in my case.

Thanks

C R (32 Points)
Replied 10 May 2023

Is there any particular reference that I need to point it out to CA whom I approach with this referenced information?

If this is valid, than in that case I can drop off the following plan for my mother's reinvesting for LTCG exemption

1. But a flat with mother as a co owner ( mother pays the full cost tl claim LTCG exemption benefit)

2. Her name is listed as a third owner

3. The purchase agreement for flat shows her share as 100 % or max possible ( so as to not avoid any challenge from LTCG exemption rules compliance.

4. Remove mother's name after two years ( after the required lock in period And as per her approval .

5. On removal of her name , the remaining co owners take over her share and pay the stamp duty in proportion to her share as per market value of property at that time.

6. This is done either thru gift deed or transfer deed which ever is better to save stamp duty charges at that time.

7. However ,I was told that mother s share in the property can not be kept at minimum when she is paying full amount AND it may conflict with IT rules with the possibility that IT Allows LTCG exemption only to the extent of her share shown in the reinvested property.

All of these can be avoided if it is legally allowed to claim LTCG exemption for my mother by fully investing LTCG in the new property in my name only ( son).

So would need to have a clarity in the matter

Thanks once again for responses.

Regards,