Hi, In the year 2017 I had bought a house in Kerala which was later transferred to my father' s name as gift deed. My father passed away in 2020 and a house which was also in his name in Hyderabad was sold by legal heirs(Myself, my sister and my mother) of which money was credited to my bank account. Using this money I have given advance to purchase a property in Bangalore and along with my wife' s partnership going to complete sale deed next month. Currently I am in Kerala before I leave I want to get the house in Kerala which I had bought to be transferred to my name, for which my sister and mother are ready. Before I proceed I have following queries - 1) If I transfer Kerala house to my name before completing sale deed of Bangalore house and filing ta returns will it impact capital gain tax from selling of Hyderabad house ? 2) I am looking to know how much is the capital gain tax I need to pay and to calculate it what all details are needed ? I can share.
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on father demise your mother , you and your sister are legal heirs of kerala property
2)your mother and sister can execute gift deed for their share in property in kerla
3) it would not impact capital gains tax of sale of hyderabad house
4) for calculation of capital gains tax consult a local CA
The Kerala house devolved on you, your sister and mother equally as legal heirs
Your mother and sister are agreeable to release their shares to you
By that release you are not purchasing any property
The other legal heirs are simply releasing their shares to you
And to claim exemption from capital gains tax it is not a requirement of law that it has to be property specific
The assessee just has to show that he has invested the capital gains in a residential house
Whether that capital gains was invested in the Kerala house (to pay for the shares of the mother and sister which they released to you) or for buying the Bangalore house, would not matter at all
I am assuming that no consideration is passing from you to your mother and sister for the Kerala house
As regards computation of capital gains tax, you have to deduct the indexed cost of acquisition of the Hyderabad house, the amounts associated with the transfer like brokerage, lawyer fees etc, from the sale consideration and the balance would be your capital gains which you have to invest to claim exemption from CGT
Your ca will calculate the indexed cost of acquisition
It will be depending on the amount you sell the house and amount of purchase etc
1. The house property sold at Hyderabad may attract capital gains tax if there are any capital gains derived out of the sale of property even though you got it through a gift deed.
However as you have invested this money to purchase of new house property, you may be exempted from paying capital gains tax to that extent of your investment out of your capital gains.
By transferring the property at Kerala to your name, you need not pay any tax because it is a transfer to your name and not that you are purchasing it.
2. You may have to pay the capital gains based on the term, i.e., long term or short term.
- Under the Income Tax Act , property is regarded as a capital asset and any gains arising from its sale is taxable as Capital Gains.
- Further, if the property is held for less than three years prior to its sale, it is termed as a short-term capital asset and any gain arising from the sale is treated as a short-term capital gain.
- Further, if the property is sold after a holding period of more than three years, it is to be treated as a long-term capital asset and a gain arising from its sale is assessed as long-term capital gains
- Further as per Section 54EC of the IT Act, any capital gains arising from the transfer of a long-term capital property/asset would be exempt if the gains are invested within a period of six months in specified investments, and these investments are three-year bonds of National Highway Authority of India (NHAI) or Rural Electrification Corporation
- Further, as per Section 54EC of the IT Act, any capital gains arising from the transfer of a long-term capital asset/ property, would be exempt if the gains are invested within a period of six months in specified investments, and these investments are three-year bonds of National Highway Authority of India (NHAI) or Rural Electrification Corporation (REC). However, there is a restriction in this investment: the amount invested cannot exceed Rs 50 lakh in any financial year.
- Further, after the death of your father his property would be devolved upon all legal heirs , then you can take other legal heirs share by way of gift deed to save the capital gains.
Dear Client,
Since you have already bought the house, and you have it in your name, you need not pay any tax. This is with regard to your house in Kerala.
However, the sale of the property at Hyderabad may attract Capital Gains Tax if there are any capital gains derived out of that property.
The Capital Gain Tax shall be based on either short term or long term, depending upon the tenure of the holding period of the property.
Thank you.
