Capital gain from House Property

Hi,

If a father wish to sell a house property and son wish to buy new house property his own name by using those funds then, will capital gain be applicable to father and/or son? if yes then how much it will be? and how to avoid capital gain? whether new property should be bought on both Father+Son name? please guide.

Regards,
Ashwin

May I get reply on my query please? its been pending since 16 days.

Ashwin

Hi Ashwin,

Since your father is selling the property, he will be paying the capital gains tax. In case you want to avoid capital gains, the new house property can be bought in the name of your father. In case you buy the property in the name of your father and yourself, the proportion in which he owns the property will be used to decide the capital gains exemption.

The amount will depend on the value of the property, when it was bought and sold and the indexation for those years. Please read this blog post for more information - How To Calculate Long Term Capital Gains.

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Cheers,
BB Expert

Thanks for reply, add on question is, I have property name on my name too which I want to sell, so in this case both my father and I sell the respective flats and buy new property in joint name then will it attract capital gains? as we are investing again in property within 1.5 years.

Hi Ashwin,

Even in that case, the proportion in which you both own the property will be used to decide the capital gains exemption. Suppose your capital gains are Rs. 50 lakhs and your father’s capital gains are Rs. 25 lakhs. You buy a property in the joint name for Rs. 75 lakhs and you own the property 50:50. In that case, you can claim capital gains exemption for only Rs. 37.5 lakhs while your father can claim Rs. 25 lakhs as his proportion will be Rs. 37.5 lakhs.

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Cheers,
BB Expert

Thanks for clarification.