Avinash (asst) 07 March 2011

Capital gains tax on amount received from Sale of Flat

I will be getting 25lacs(by Cheque or Electronic Transfer in the bank account) from sale of a flat. Now can I invest 20 lacs to buy another flat and keep remaining 5 lacs to invest in house hold items, also to pay stamp duty and registration charges. Will i be taxed on 5 lacs. And if yes What %. Or I have to invest entire 25 lacs to purchase another flat.

First flat purchase value 1.50lacs at the time of purchase. Year was 1989.
Place of Property - Pune

First Property was purchased on 15th, June 1989.
and proceed from sale of flat will be received in April, 2011

Mother is owner she will mention in sale deed 75% from sale will go to me. Will be Electonically Trasnfer to the bank account. Since other brother has a house of his own.

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A V Vishal (Advocate) 08 March 2011

Since mother is owner, the tax liability on capital gains will arise to her on the entire consideration received (even though 75% of it will go to you), she needs to plan her taxes and as far as your case is concerned the 75% share will be gift from your mother and will not attract any type of taxes. You can invest any amount of the gift received to acquire the property.

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A V Vishal (Advocate) 08 March 2011

Further from the details given by you, the sale consideration would be approximately Rs.33,33,333/-. The Indexed cost of acquisition is Rs.620,058/-. The capital gain arising on the sale is Rs.27,13,275 (Since CII of FY 2011-12 is not yet announced the CII of 2010-11 is taken as base). Your mother has to utilize this amount of capital gains in purchasing another house or alternately investing in REC/NHAI bonds. In case she does not do both and instead chooses to gift 75% of the amount of sale consideration straight away to you then in such case she has to bear tax on LTCG to a tune of Rs.558,930/-.

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