My wife has 1BHK in Pune before marriage (2006) with her father as second owner . EMI is paid by my wife. Now we want to sell that flat and purchase 2BHK flat in my wife and my name. I want to know how avoid capital gain tax if any. and what if we purchase under construction flat, what is the time frame in which we should get possession. Anuj
Sir in the present case you can take property in your and your wife name to avoid capital gains.
You can also invest in under construction flat . The time limit is 2 years from the date of transfer. You can pay the advance for the property after sale of old flat and get the possession .
To avoid capital gain tax, you can invest in new residential property between 2 years from the sate of sale of old property or 1 year before from the sale of old house property.....
You can buy the property in joint name i.e your wife and your name
Dear Anuj,
Firstly capital gain taxes will arise on the sale of old 1BHK flat. However, the same can be saved by investing in another residential house property. you have following two option to avoid capital gain taxes.
1. Purchase of another Residential Property
within 1 year before or 2 years after the due date of transfer of the Property sold and/or
2. Construction of Residential house Property within a period of 3 years from the date of transfer/sale of property
Do let us know if you need our help in computation of capital gain taxes and filing of return of income.
Dear Sir,
You can sell the flat held in the name of your wife and capital arising shall be taxed equally to your wife and his father.
Also the 50% of amount invested for new 2BHK house shall be eligible for exemption.
You need to get possession within 2 years of the under construction flat.
Dear Sir,
You can purchase a ready to move in flat within a period of 2 years from the date of sale of your earlier flat or you can buy an under construction flat but the construction should be completed in a span of 3 years from the date of sale in order to save up on Capital Gains.
Trust that clarifies your query.
Feel Free to get back for any further clarifications.
Thanking You.
Regards,
CA Rohit R Sharma
BCOM, ACA, LLB - GEN, CERT. FAFP
