MATHEW (PROGRAMMER) 04 September 2009

Property transfer/gift

(1)I have 2 flats in my own name. The first one was purchased in 2003 at a cost of rs.5 lakh. I want to transfer one of the flat in the name of my wife. What is the best mode of transfer with out any money transaction ? What is the income tax implication ? (2) If I sell the flat, using that money can I buy a flat/property in our joint name or solely in her name as a reinvestment with out paying capital gain tax ? (3) Can the money got by selling a flat can be used for buying land as reinvestment with out paying capital gain tax ?

Mathew

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A V Vishal (Advocate) 04 September 2009

Dear Mathew,

Clarify What do you mean by transfer without money transactions. You can gift the property to your wife, however, even if there are no tax implications on gift but in case of sale of the gifted property by your wife within 3 years it will attract short term capital gains. The best option would be sale of the property by you(Since in such case the property is held by you for more than 3 years and therefore you will be eligible for LT Capital gains) and the resultant capital gain can also be invested either to purchase a residential house in your name or jointly in both the names or even in yours wife's name. Further, the money received on sale of the flat will not be eligible for exemption of Capital gains if invested in a open plot.