Property buying before selling older jointly owned house

The capital gains would be exempt if the small unit is sold within 1 year of purchase of new property.

Make sure new property is also registered in joint ownership.

Yes, home loan can be paid off using sale proceeds.

Yes, you can save capital gain taxes if you sell the small unit within one year from the date of buying the new property.

Please also make sure that new property should not be a underconstruction property. It should be a ready property.

Further, you can pay off the loan from the sale proceeds.

Yes, provided the property is sold within one year of buying the property.

the sale proceeds can be used to pay off the home loans.

The joint ownership should not have any issue.

Regards,

Nikhil.

Hi ,

Yes definitely you can get tax exemptions by utilizing the sale proceeds from sale of smaller unit after you purchase the said residential property provided the sale is done within 1 year of buying the new house.

You can use the sale proceeds to pay back loan, such repayment should be taken as fulfilling the condition of using the sale proceeds u/s 54/54F.

But take care of the time limit ; as post 1 year you can not take the exemption.

The joint ownership of the smaller house will also not have any impact on the capital gains calculation.

As per Section 54 of Income Tax Act,1961

An Individual or HUF can get the benefit of exemption of Long Term Capital Gain on sale of Old Residential Property if assessee purchase the New residential property before 1 year or after 2 years from the sale of Old Residential Property.

Hence, in your Case you are required to Sell out your old Residential property within 1 year of date of Purchase of New Property so as to claim exemption on Capital gain even if you funded your new property from any source like Bank FDs or Home Loan.

Yes, can can use the proceeds fromn the sale be used for paying home loan without any problem.

Yes, Joint ownership of Old House have impact on the Capital gain Calculation

You can claim the exemption on your share of Capital Gain as the new property is in your name.

Your father are not eligible for exemption as he has not purchase any new resi. Property in his name

If the property has received the OC, it will be considered as ready to move.

As far as the joint ownership is concerned, if you can sufficiently prove that the smaller property was solely bought by you , you will be able to take full exemption.

But, if the smaller property cost was borne in some proportion, you will only be able to take the capital gain exemption to the extent of your contribution. Since the new property is not in the name of your father, he will be liable to Capital gains tax on his share.

hope that clarifies.

Regards,

Nikhil

The co-ownership will not affect your 100% tax benefit entitlement.

Even though, the Act is silent on your question but going by similar case laws ; full tax benefit entitlement was upheld.

The key is that it doesn’t matter in whose name the property stands, it is only the person who has effectively paid for the property that will be eligible to and can claim the tax deductions on the same.

For tax purposes , Date of allotment is crucial date.

There would be no implications as per the income tax act, but it may be considered as a benami transactions.

You may sure such amount from your father as loan to you or your wife.

It would be a ready to move in property.

Your father portion of capital gain will be taxable. Purchase jointly with father and then transfer to your wife to avoid taxation.

Ready to move.

In case the property has received OC then it will not be a underconstruction property.

You can buy the property. Make sure that you are not paying any GST in the property value as GST is not applicable on ready flats.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Dear Sir,

If the property is not purchased jointly with your father than his share proportionately shall be subject to capital gain

Hi,

You can sell the older property within 12 months from the date of acquisition of the new house to avoid incidence of any capital gains tax.

Further, the acquired property should be ready to move in and not under construction property in order to avail any tax benefit.

In addition to this, any change in the ownership of new house from that of the older house shall also be considered as liable for taxation on capital gains on sale of old house.

Regards,