Can I purchase two residential home properties from the sale proceeds of single residential home property for claiming the exemption from long run capital positive aspects collectively with my youngsters? One property was bought simply 1 month previous to the sale and one other is deliberate to be bought inside 2 years from the date of sale utilizing the whole sale proceeds. If not, please information me as to how I ought to go forward with a view to making sure that the advantages might be handed on to my son and daughter with none earnings tax implication both to me or my youngsters within the occasion of my loss of life.
For availing exemption for long run capital positive aspects arising on sale of a residential home, you’re required to take a position solely the listed capital positive aspects from sale of the present home property and never the whole sale consideration. For claiming exemption underneath Section 54 the funding must be made solely in a single home and if funding is made in multiple home, it’s a must to select the home in respect of which you need to declare the exemption.
However as per numerous judicial pronouncements, if multiple flats are used as a single unit like adjoining flats or duplex in the identical constructing, the profit could be claimed underneath Section 54 even for funding made in multiple flats. There is not any restriction on you shopping for the brand new property in joint names of your self and your son or daughter to say the tax exemption underneath Section 54. What is required is that you must make investments the required long run capital positive aspects in the home. 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 case full capital positive aspects can’t be invested for buy of a home, you’ll be able to make investments as much as Rs. 50 lakhs in capital positive aspects bonds of specified monetary establishments inside six months from date of sale of the home.
In order to make sure that the property passes on easily to your son and daughter after your loss of life, please put together a will specifying the share of your son and daughter in all of your properties whether or not movable or immovable. Your son or daughter won’t need to pay any tax on the time of inheriting the properties however could need to pay tax as and when the property is bought.
(Balwant Jain is a tax and funding skilled and could be reached on [email protected] and @jainbalwant on his twitter deal with)
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