Residential property capital gains tax exemption

Rave Gerawal (Querist) 02 February 2011 This query is : Resolved
Hi,

residential property in name of 3 family members is being sold after over 3 years. New residential propert being acquired will be registered only in name of 1 of the 3 sellers. Will they be able to avail exemption under long term capital gain ???

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A V Vishal (Expert) 03 February 2011
I think this is in continuation of your earlier post, yes, the person who receives the entire consideration can invest the capital gain/proceeds in a new property to be invested by him. There will be no tax issues in the other two vendors case.

SANJAY GUPTA (Expert) 03 February 2011
Agree with Mr.Vishal

B.Chakrapani Warrier (Expert) 03 February 2011
If the sold out property is in the joint names of three persons, each co-owner derives capital gains, each co-owner has to reinvest in their individual name so as to avail benefit of deduction under the Income tax Act,1961.

Vineet (Expert) 03 February 2011
I do not have the background of case regarding original contributors in acquisition of property.

Prima facie I agree with Mr Chakrapani. If all the three vendors have equal share in the property, it is immaterial who has received the consideration as all the three vendors are chargeable to capital gains tax in the ratio of their shareholding in the property.

If only one vendor is investing in new property, he will be eligible for exemption u/s 54 in respect of capital gains chargeable on him. Other two vendors still have to pay tax on their share.