My mother solely owns a "house property" in Maharashtra. The plot of land and the house constructed on it bears her name only. The plot was purchased by my father, in mothers name, in1971 and house built by him in 1973. My mother now wants to divide & sell this property into herself and her two sons in the proportion 20(herself):40(son1):40(son2). She has no daughters. The purpose of sale is to divide proceeds into manageable chunks and then to invest in house properties(flats). She already jointly(with husband) owns two flats other than the house property to be divided and sold. Each son has one house in their name. 1) how to divide property ? is it done by gift deed or partition deed or any other way ? which is better suited for the purpose. 2) If property is divided by means of gift deed mentioning each share of individual then after the sale how each individual invest his share of the proceeds to save tax 3) Is it possible to sell the property first (without dividing or gifting share) and then divide and "gift" proceeds(money) in required proportion. Who is liable to pay LTCG in this case. Is it my mother liable to pay all LTCG as soon as she gets the entire sale value ? 4)If property is divided or gifted first and then sold, then what is tax payable by mother if she invests in a flat(house property) whose value is greater than her LTCG. remember she already has two flats.
1 Gift is the better option.
2 Either in a house or in bonds issued u/s 54EC.
3. In case of sale mother will have to bear capital gains tax or she alone will have to invest in house or bonds and claim exemption.
4 mother can save capital gain by investing in a house or bonds.
Thank you Vijay Kale Sir ! My mother already has two flats in her name. Now if she wants two invest capital gain arising out of sale of her house then can she buy more than one flats/houses from the proceeds of sale ? what is tax liability if she buys lets say two flats ?
Recently amended section 54 says that one residential house, and such interpretation of law will allow you exemption for one residential house only.
I think this question is addressed to CA VIjay Kale.
Thank you sirs ! As per latest amended section 54 if one can buy 1 residential house after selling house property to save CGT. If the proceeds of sale may be high then can one purchase two or three flats on same floor and claim it as 1 residential house ?