Can I purchase two home properties from the sale proceeds of a one residential home held by me for greater than 24 months, with out paying any revenue tax? For clean succession, I need to purchase one property within the joint names of me and my son and second property within the title of me and my daughter although total funding will probably be made by me. If not, please information me as to how I ought to go forward to make sure that the property is handed on to my son and daughter with none revenue tax implication.
Under Section 54 of the Income Tax Act, a person tax payer is entitled to say exemption from cost of tax on long run capital positive factors arising from sale of a residential home if he invests the capital positive factors for purchasing one other residential home inside specified time interval. It could also be famous that for availing the tax advantages below Section 54, you might be required to speculate solely the listed capital positive factors on sale and never the complete sale consideration of the prevailing home property. Thus the extent of cash which it’s essential to make investments will probably be decrease than what you might be anticipating now. Exemption on long run capital positive factors from one residential home can solely be claimed for funding in just one residential home property.
However, as per numerous judicial pronouncements of assorted revenue tax tribunals exemption could be claimed for purchasing greater than two flats if these flats are used as a single residential unit like adjoining flat or a duplex in the identical constructing. Even the advantages could be claimed for purchasing a full residential constructing whether it is proposed for use by a single household having one widespread kitchen.
There aren’t any restrictions on you shopping for the proposed property collectively along with your kids so long as you’ll be able to set up that you’ve got made the requisite funding within the property.
Your son or daughter could be made joint proprietor within the settlement even when they don’t make investments any cash within the property. In order to make sure that the property passes on easily to your kids after your loss of life, please put together a Will specifying the share of your son and daughter in all of your property whether or not movable or immovable. Your son or daughter won’t must pay any tax on the time after they inherit your property in your demise and also you additionally won’t must pay any tax now in the event you make investments the complete listed long run capital acquire as mentioned above.
Balwant Jain is a tax and funding professional and could be reached on jainbalwant@gmail and @jainbalwant on Twitter
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