Sale of property in pune.

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.

asked Mar 31 '12 at 04:39 by Shiva Suresh 1112

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.
(Mar 31 '12 at 15:35) Shiva Suresh
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.
(Mar 31 '12 at 17:20) Pankaj Batra
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?
(Mar 31 '12 at 18:46) Shiva Suresh
If property is sold in April 2012 and possession of new residential house property is not received before 31st July 2013, then amount needs to be invested into capital gain scheme account. Before 31st July 2013, it can be kept in bank FDs. In case of ancestral house, original purchase cost of property would be considered (as acquired by grandparents). In case such cost is not available fair market value as of 1st April 1981 would be considered. Also indexed cost of construction in 2000 would also be added in cost of property.
(Mar 31 '12 at 20:48) Pankaj Batra
Could you please work out the capital gain here using fair market value as of 1st April 1981 etc? Also since we can keep the money in bank FDs till 31st July 2013 can this interest earned be added to buy new property or any other personal use, and how will this interest amount be taxed? Thanks a tonn for all the answers.
(Apr 01 '12 at 04:13) Shiva Suresh
I cannot find fair market value in 1st April, 1981. You need to get in touch with local authorities to know this rate. This rate varies from area to area. Interest earned on bank fixed deposit would be added to your taxable salary and taxed as per slab rates. There is no tax benefit on this interest.
(Apr 04 '12 at 11:48) Pankaj Batra
showing 5 of 6 show all

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.

answered Mar 31 '12 at 12:47 by Pankaj Batra 5.2k320

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Asked: Mar 31 '12 at 04:39

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Last updated: Apr 04 '12 at 11:48