Hello Sir, 1.Property in my fathers name is being sold for Rs.30,00,000/- with this money I (son) want to buy a new property within 2 years (new property cost is double) in my name. 2.Also the buyer wants to quote a buying price of Rs.20,00,000/-(sale agreement) and the rest Rs.10,00,000/- he proposes to give cheque in my name. 3.What are the tax implications here? 4.What steps do we take here to have a smooth sail through this financial situation.
Thanks in Advance.
If new property is bought in your name, your father won't get tax benefit on long term gains arrived on property sale. Your father would have to pay income tax on gains.
There can be issues if you show a different amount on sale agreement. Its a revenue loss for Govt in terms of stamp duty, due to non-declaration of actual amount.
Income tax department can send you notice to declare source of high credit to your account (10 lakh). They may ask you to pay 30% tax on this amount as it would be considered an income or gift.
I would advise you to show full sale amount on registration documents. Compute long term gains for your father and buy new property in new joint names of you and your father. As share of your father in new property cost would be equal or more than sale consideration of old property, he may not have to pay any taxes on gains.
Thanks a lot Mr.Batra, I have another question..If the sale amount of 30,00,000/- is invested in FD's for a period of 18 months till we buy a new property then again what will be the tax implications here? Can this interest be added to the sale amount as anyway the new property is of value Rs.60,00,000/- plus.
If property is not purchased before last date of tax filing (31st July, 2012 in case property was sold in 2011-12), then amount needs to be kept in capital gain scheme account. If its not deposited tax benefit under 54/54F cannot be claimed.
In my case property is being sold in April 2012, so I guess this will be considered as 2012-13 right? then can the money be deposited in an FD scheme. Also this being ancestral house which was demolished and a apartment was constructed in the year 2000 my father got this house being the owner of the demolished house...in this case how will the capital gain be calculated? Here a purchase price(in the year 2000) as such is not there?