HT Estates - - HTESTATES - Harsh Roongta

I am a se­nior citizen and own the flat where I am cur­rently re­sid­ing. I also own a plot which I pro­pose to sell and pur­chase other prop­er­ties out of the sale pro­ceeds in my son’s name. What are the cap­i­tal gains im­pli­ca­tions?

—Chan­der Ma­lik As­sum­ing that the plot you in­tend to sell is held by you for more than three years, you need to ful­fil the fol­low­ing con­di­tions in or­der to claim ex­emp­tion from tax: You should in­vest the en­tire sale pro­ceeds from the sale in buy­ing a residential prop­erty within two years from the date of trans­fer of plot or for con­struc­tion of one residential house in In­dia within three years from the date of sale.

You should not own more than one house at the time of pur­chase of the new house. Also, the new prop­erty which you are buy­ing should not be sold by you for a pe­riod of at least three years from the date of pur­chase. In case the en­tire sale pro­ceeds are not in­vested in buy­ing or con­struc­tion of a new prop­erty, then the amount of ex­emp­tion shall be al­lowed pro­por­tion­ately.

The new prop­erty (and it can only be one residential flat and not two as you pro­pose) has to be in your name though your son could be a joint owner. I pur­chased a prop­erty in 2010 when I was sin­gle. Both the prop­erty and the loan are in my name. Now that I am mar­ried, I want to in­clude my wife’s name as the coowner of the prop­erty. The prop­erty is still un­der con­struc­tion and it will be another year be­fore I get pos­ses­sion. Please ad­vise on what I should do.

—Sau­rabh Tri­pathi Please note that any trans­ac­tion re­lated to the prop­erty would re­quire the con­sent of the co-owner as well. It will fa­cil­i­tate the trans­fer of prop­erty in favour of your spouse in case of your death.

A joint owner will, by de­fault, be the owner of half the prop­erty, but you can specif­i­cally men­tion the pro­por­tion of the own­er­ship be­tween you and your spouse. Here are two ways in which you can make your wife a co-owner: Sale deed: You can sell a por­tion of the prop­erty to your wife and she can use this sale deed to get her­self reg­is­tered as the co-owner of the prop­erty by pay­ing stamp duty and reg­is­tra­tion charges like a nor­mal sale which will vary in the range of 5-12.5% of the mar­ket value of the prop­erty (varies in dif­fer­ent states). If you treat this as a sale and the price is higher than what you booked it for, then there could be cap­i­tal gains tax on this sale.

In your case since the house is still un­der con­struc­tion, you will be able to add a co-owner if the builder agrees. Most de­vel­op­ers re­strict or pro­hibit trans­fers be­fore you take pos­ses­sion of the house. If it’s al­lowed then it is alikely to at­tract trans­fer charges. How­ever, the ad­van­tage of tak­ing this step is that if the own­er­ship is trans­ferred be­fore the sale deed is drawn, you will not have to pay an ad­di­tional stamp duty or reg­is­tra­tion charge.

Gift deed: You can also share the own­er­ship by gift­ing it to your wife. Get a gift deed ex­e­cuted and register it and pay stamp duty. If you have a home loan, you will need the bank’s per­mis­sion to co-own the house. Your wife can easily in­cluded as the coowner and as a co-bor­rower.

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