Your property-related financial questions answered by R.P. Deshpande
I propose to dispose my hire-purchased home. It was priced at Rs. 45,000, for the period of twenty years instalment. Now all the documents are with me. I paid a stamp duty of Rs.1,000. Please let me know if the amount received through the sale of the property is eligible for income tax payment. If so what will be the amount per lakh?
GK Menon, Trivandrum.
The gains from the sale of immovable property attract Capital Gains Tax. In your case since the property is held for more than three years, it is classified as ‘Long-Term’ capital gain. Hence the gain attracts 20% tax (Rs. 20,000 per Rs. 1 Lakh). While computing the gains, indexed value of acquisition is considered and allowable expenses are also deducted. Please approach a Chartered Accountant with relevant documents, who will guide you further.
I am a senior executive in a PSU and my wife is a government school teacher and both are employed and living in Chennai. We purchased an individual house in 2006 in Madurai by obtaining a bank loan and registered in my name. Now, we are thinking of disposing the house in Madurai and plan to purchase a property in my wife's name at Chennai after closing the bank dues in Madurai. Please let me know if the amount got from the disposal of property in Madurai can be directly invested in the new property in Chennai in my wife's name. Also, if it is possible, can the amount (from disposal and deposited) be shown and closed in my income tax return.
Income tax treats each individual separately. The sale proceedings from property owned by you attract Capital Gains tax. It is advisable to purchase new house in your name or on joint names of you and your wife and in such a case, the capital gains arising out of sale of house in Madurai will not attract Capital Gains tax.
The full sale consideration of a residential flat was received in January 2013. However, the registration of sale deed is expected to be done only in April-May 2013 as per the buyer’s decision. I am planning to invest the capital gains portion only in Capital Gains Bonds as available under section 54-EC. My queries are:
- Does the time limit of six months from the date of sale for investment in Capital Gains Bonds apply from the date of receiving the full sale consideration OR from the date of registration of sale deed?
- Can the sale consideration received be invested in the spouse / child's name during the time limit of six months?
Anulekshmi N, Trivandrum
You will have six months time from the date of sale deed registration to decide on Capital Gains computation. If you invest capital gains in Capital Gains Bonds, within six months of sale deed, capital gains tax is not applicable. If you invest capital gains in purchasing a residential property in the name of your spouse or children, you cannot claim exemption for capital gains tax. You can invest capital gains to buy a residential property in your name or in joint names of spouse or children along with you to avail exemption of capital gains tax.