Hi Sreekanth,
Had gone thru your blogs on Real estate and taxation. Have few queries on below case.
My friend's mother belong to HUF in which her Father was Karta having 3 daughters and one son. Karta purchased house property in 1986 and died in 2015. Now son wants to dispose of the property in which all co-parsrners have equal rights. Daughters have decided to relinquish their rights on some specified consideration. But in sale deed there is no such mention of consideration against the relinquishment, instead it is mentioned as equal right sharing vendors. After execution of sales deed, daughters have received pre-decided amount thru cheque after deducting TDS. but as per the deed her share comes to higher figure.
So here my query is,
1) whether the tax liability will be levied on accrual share as per the deed, or on actual amount received via cheque.
2) Is tax levied on actual amount or accrual share amount?
3) How to claim TDS deduction while filing ITR?
4) How to calculate Cost of acquisition/LTCG here?
5) What are the ways to save the tax on LTCG?
Thanks,
Anu
5 Answers
Dear Anu ji,
The transfer of property through Relinquishment deed can be for consideration or without consideration (without any exchange of money).
Here, it is with consideration but the same has not been mentioned in Deeds (am i right)?
That's strange!
Again the co-parceners have received the amount via Cheques.
1 - So, the tax liability is based on Cheque value.
2 & 3 - The actual amount is not mentioned in the Relinquishment deed right??
4 & 5 - The LTCG taxes have to be borne by the Son as he is going to sell the property.
Kindly read :
https://www.relakhs.com/how-to-save-capital-gains-tax-on-sale-of-land-house-property/
https://www.relakhs.com/ancestral-property-legal-rules/
https://www.relakhs.com/sale-gifted-property-capital-gains/
https://www.relakhs.com/real-estate-property-transfer-deed-types/
Hi Sreekanth,
I guess, you interpreted my query as a matter of relinquishment deed. There was no relinquishment deed executed. A proper Sale deed has been signed and executed by 4 coparcenors as equal sharing vendors. But in reality a specified amount was mutually decided between the siblings and daughters have received the cheque for the pre-decided amount which was less than their equal share in the sale deed. Cheque number is mentioned in Sale deed, but not the cheque amount. Rest all has gone in the hands of the son.
So, as per the deed, all 4 have got equal share in the sale proceeds but in reality less amount has been received by the daughters.
So, now my query is
1) whether the tax will be levied on the actual cheque amount or on the share amount which will come out of equal share in the sale deed.
2) How to claim TDS deduction while filing ITR?
3) How to calculate Cost of acquisition/LTCG here? Thanks,
Anu
So, now my query is
1) whether the tax will be levied on the actual cheque amount or on the share amount which will come out of equal share in the sale deed.
2) How to claim TDS deduction while filing ITR?
3) How to calculate Cost of acquisition/LTCG here? Thanks,
Anu
Dear Anu,
As Cheque numbers have been mentioned in the Sale deed. It is advisable to make them as the base figures for taxation view point.
Suggest to go with the same figures as in Cheques.
2 - TDS as per the share in the property.
3 - Based on the share in the property.
Suggest you to kindly consult a CA in this regard.
Hi Sreekanth,
How are you doing? Thanks for your response earlier.
Further to above conversation, few more query to check.
If mother(who received the amount thru cheque) now want to purchase property along with her daughter and son in law, so
1) Can she purchase property with joint name for LTCG exemption?
2) Is it required to mention percentage owning of each person?
3) Will she be main(first owner) and daughter and son in law be as co-owner, or can she be as co-owner and make daughter as first owner?
4) If, for the balance amount daughter and son in law takes home loan, so in this case does mother required to be first owner or daughter can be first owner?
5) So, To save LTCG and get home loan also, is it neccessary mother in law as first owner, or she as co-owner will be sufficient, with her %share defined? Thanks,
Anu
Further to above conversation, few more query to check.
If mother(who received the amount thru cheque) now want to purchase property along with her daughter and son in law, so
1) Can she purchase property with joint name for LTCG exemption?
2) Is it required to mention percentage owning of each person?
3) Will she be main(first owner) and daughter and son in law be as co-owner, or can she be as co-owner and make daughter as first owner?
4) If, for the balance amount daughter and son in law takes home loan, so in this case does mother required to be first owner or daughter can be first owner?
5) So, To save LTCG and get home loan also, is it neccessary mother in law as first owner, or she as co-owner will be sufficient, with her %share defined? Thanks,
Anu
Dear Anu,
1 - Yes.
Kindly read :
Long Term Capital Gain Exemptions on Sale of Property & Recent Court Judgments
2 - It is your choice. Legally, if no ratio is mentioned then by default it is 50:50.
3 & 4 - I believe it can be in any combination but ideally let her be the primary owner to claim LTCG tax exemption (helps to justify in case of any tax notices in the future).
Kindly read :
Can you take a Home Loan and also Claim LTCG Tax Exemption on Sale of Real-Estate Property?
5 - Co-owner of the property can be sufficient.
Please login or Register to submit your answer