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.