My parents selling their accrude property which is my mother's name, I will be receiving 40% of the sale Value from my parents and some amount of this roulghy 10% is being directly paid by seller to me due to some urgent requirement of funds. Please suggest it is OK to take money from seller, how can I avoid huge capital gain tax on this , since also I am reinvesting same In buying a new property. The entire transaction is around 40lacs and direct payment to me from seller is 7 lacs only.
Dear Sir,
You can claim an exemption from LTCG, under section 54 of the income-tax Act if the LTCG is reinvested in a new residential property located in India within the specified time frames. Where the new property is purchased, the gain is required to be reinvested either within 1 year prior to sale date or 2 years after the sale date. Where the new property is constructed, the time period prescribed for the reinvestment is within 3 years from the date of sale of the original asset.
- Yes, you can receive the funds directly from the purchaser in your account but it is advisable to take the entire amount firstly into your mother account then take money from your mother.
- Capital gain will be taxable in the hands of your mother as the property is in her name. She can invest further in house property or bonds or start-ups.
- No benefit to you for reinvestment in new property.
- Firstly calculate the capital gain.
Hello,
Better if the seller pays the amount first to your mother and then you take it from your mother.
Capital Gain would be applicable to your parents.
They can get the exemption for investment in new house property even if the same is purchased in your name but payment is made by them.
I hope that this answer satisfies your requirements.
Regards,
CA Hunny Badlani
Hello Sir,
-No, it is not ok to take the money from seller.
It is advisable to first take the money into your mother account and then take the same as a gift from your mother.
-Capital gain would be taxable in your parents hands.
To get the capital gain exemption, they need to invest the amount either in residential property or in 54EC bonds within timeframe.
-There would be no tax benefit if you invest the amount in new property in your name.
Hi
Since the property is in the name of your mother, she will be liable to pay the capital gain taxes.
It is advisable to receive funds in your mother's account and then transfer it to your account as gift. Receipt of gift shall be exempt income for you and there shall be no tax liabilities on the same.
Since the property is in your mother's name to save Capital gain tax either invest the capital gain amount in new house along with your mother or let your mother invest the amount and then take the house as a gift from your mother.
What's is the capital gain amount?
Have you calculated the FMV on 01.04.01 if the property was purchased before that.
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Thank you
