Capital Gain Tax

In the year 1999, I had bought a flat in Bangaluru. This was bought on loan thru HDFC. While I paid all the monies (initial and EMI), it was bought in the joint name of my husband and me. As it stands, the flat is free from all loans and is jointly held by us.

Additionally, I have recently inherited 2 floors of a lease hold property (plotted house). Though the property is more than 25 years old, I have only inherited it 6 months ago. This is a 3 floor property and is located in NCR.

Recently, a builder has approached me and offered to rebuild the property after he has acquired a floor (i.e. excluding my 2 floors) from my brother. He is suggesting that we collaborate and rebuild the premises at his cost as per the current bye laws. In lieu of this he has offered me 2 floors and some consideration (vide cheque). Currently, I stay and use both the floors of this property.

My questions are:

a) If I enter into this deal, will the consideration received by me from the builder attract long term capital gain tax? If yes, how can I save it as I also own a flat in Bangaluru.

b) If I enter this deal and sell one of the two floors (i.e. retain only one)and then within the next few months buy another residential property equal to the sale price of one floor and cheque consideration, will it attract short term or long term capital gain? If yes, how can I save it as I also own a flat in Bangaluru.

c) Should I sell my Bangaluru flat, will the consideration received by me from the builder still attract long term capital gain tax? If yes, how can I save it ?

d)Should I gift/relinquish my Bangaluru flat to my husband, will the consideration received by me from the builder attract long term capital gain tax? If yes, how can I save it ?

In short, what is the best option to save Capital Gain tax while keeping the transaction in cheque?

Capital gain arises only on the transfer of capital assets. Any profits or gains arising from the transfer of a capital  asset effected in the previous year shall be chargeable to income-tax under the head ' Capital gains ',and shall be deemed to be the income of the previous year in which the tranfer took place.Transfer in relation to a capital asset, includes- 1. the sale, exchange or  relinquishment of the asset, or  2. the extinguishment of any rights therein, or 3. the compulsory acquisition thereof under any law.

a) If I enter into this deal, will the consideration received by me from the builder attract long term capital gain tax? If yes, how can I save it as I also own a flat in Bangaluru.

Yes, The consideration received by you from the builder will attract long term capital gain tax. To save tax, you may claim exemption under S.54 or s.54F, if applicable in your case.

b) If I enter this deal and sell one of the two floors (i.e. retain only one)and then within the next few months buy another residential property equal to the sale price of one floor and cheque consideration, will it attract short term or long term capital gain? If yes, how can I save it as I also own a flat in Bangaluru.

As the the NCR property came to you by inheritance, and was held by your predecesor for more than 3 years, the capital gains arising to you from its sale, will be long-term, beneficial to you as the rate of tax is less. To avoid the tax,, you may claim exemption under S.54 or S 54F,if applicable in your case. 

c) Should I sell my Bangaluru flat, will the consideration received by me from the builder still attract long term capital gain tax? If yes, how can I save it ?

Gifting/relinquishing  your Bangaluru flat to your husband, may not save tax on sale of the NCR property.

Selling the Bangalore flat will not help save tax from the sale of the NCR property.