Dear Shrikanth,
My father has a plot in Andhra Pradesh purchased during 1985 and subsequently decided to give to my daughter (married) as a gift (mentioned in the will also). Now with the consent of my daughter my father wants to give the residential plot to the development to construct the flats through developer. Now the developer says that we have to execute the gift deed in the name of my daughter so as to avoid the future complications. The final beneficiary is my daughter only. In this circumstance I wish to know the tax implications. Who will be taxed? Please give the suggestions what to do? Your suggestions will be greatly appreciated.
1 Answers
Hi,
If your father executes the GIFT DEED, then there won't be any tax implications to your father.
Once your daughter is the sole owner of the property, she has to disclose the rental income/sale proceeds when filing her Tax return.
In case if she sells the Flats that have been allocated to her (as part of joint development), she has to pay applicable taxes on STCG or LTCG (short term or long term capital gains).
When a property is received on inheritance or as a gift, it is not taxable for the receiver. When the inheritor or the receiver of this gift of property, sells it, capital gains on the sale are taxable for the inheritor.
Cost of the property – The property did not cost anything to the inheritor, but for calculation of capital gain the cost to the previous owner is considered as the cost of acquisition of the Property.
Indexation of cost – Additionally, the year of acquisition of the previous owner is considered for the purpose of indexation of the cost of acquisition.
Read:
http://www.relakhs.com/gift-income-tax-rules-detailed-guide/
http://www.relakhs.com/real-estate-property-transfer-deed-types/
http://www.relakhs.com/how-to-save-capital-gains-tax-on-sale-of-land-house-property/
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