Capital gains tax on a property that is gifted

Capital gains tax on a property that is gifted

Hi ..

I have a property in Andhra pradesh that i am planning to gift to my mother . few questions ..

1. When i gift to my mother what are the gift and registration fees that would be incurred .
2. After i gift the property , what are the capital gains taxes if she sells in 6 months vs 2 years.

Asked 2 years ago in Capital Gains Tax

I have question on the Cost Inflation Index. I bought this same property through government auction in 2009-2010 and i paid full price 89 lacs for the plot where the Cost index was 148 at that time . At that time they gave the allotment letter and didn't register the plot . They registered the plot in 2014 , where the cost Index is 240. Now today the CII is at 317. If i go by the registered document date my CCI calculation would be 317 - 240 = 77. But i paid the full amount when the CCI was at 148 . my question is if i sell my property .. 1. How can i pursue to make the CII calculation from 2009-10 where is 317 - 148 = 169. which is the actual case and that is when(2009-10) the bank also processed the loan and i started paying payments to the property.

Asked 2 years ago

1. Registraion charges of gift deed and property are state matters. You can consult local advocate or sub-registrar office. I can assist you in preparation of gift deed.

2. In case of transfer of property through gifts, period of holding and cost of acquistion of previous owner is considered. The difference would be only of indexation of cost. After 2 years, ICOA would be more due to high CII but sale consideration may also increase after 2 years. capital gain is taxable at special rate of 20%.

3. CII of allotment date would be considered i.e. 2009-10. If you sell the property in FY 2021-22, Indexed cost of acquistion would be Rs. 1.91 CR.

For detailed discussion, you may opt for phone consultation.

Vivek Kumar Arora

CA, Delhi

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Thanks for your response . Can you pls clarify this scenario . When i purchased the property in 2010 for let's say 89 Lacs. Now in 2022, according to the govt market rate is 3 cr. Now today If i gift my property to my mother , and she sells in 3 months to 3.2 CR . What should be the tax calculations she would need to consider

Asked 2 years ago

- Assuming CII of 2022-23 is 332, ICOA would be approx Rs.2cr. LTCG would be Rs. 1.20 Cr. You may also considered interst on loan as a part of COA if no other benefit of interest is claimed under Income tax Act. Transfer expenses like brokerage, legal expenses etc. are deductible from sale consideration. Retain the proofs of expenses. She can also further invest in bonds or another residential house property and claim exemption. If she does not claim exemption and assuming no other income, LTCG would be taxable @ 23.92% including surcharge. Also she would be liable to pay advance tax. I can assist you in entire process including filing of ITR.

Vivek Kumar Arora

CA, Delhi

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Hi,

1. Gift to mother is not taxable.

2. When the mother will sell the property, the period of holding will be from allotment date it.e. 2009-10 and indexation will also be allowed from that date i.e. 148. The cost will also be the cost you paid plus improvements you would have done to property.

3. In case you sell it in 6 months or after 2 years, the difference will be in terms of cost indexation of the sale year. The taxability would remain same at 20% plus surcharge and cess.

4. The mother can claim the transfer expenses like brokerage, legal expenses etc. are and can invest in bonds or another residential house property and claim exemption from long term capital gains.

5. The registration charges for the gift deed and property transfer varies with different states. If you can precisely mention your state that shall be helpful. Gift deed can be prepared for gifting to your mother.

In case of help regarding gift deeds, registrations, ITR filings, advance taxes, please reach out.

Prerna Peshori

CA, Pune

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