Ashok Monga (Adviser) 16 April 2010

Sale of Property held in joint names

A property was bought in 1990 in joint names of A & B. A contributed the entire funds. Relevant Sale Deed is silent on the contributions made, The property in question is to proposed to be sold. For saving the LTCG, it is proposed to buy a new house and investment in bonds (u/s 54 EC) to be made.

Is it necessary to purchase the house and make investment in bonds in joint names of A & B ?

What if the purchase of the house and investment in bonds is made in the name of A only? Please explain the legal implications with regard to Indian Income Tax Act i.e Section 54 and Transfer of Property Act.

Ashok Monga

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5 Replies

Rasik Dagli (Lawyer) 16 April 2010

I will not be able to tell you about Inciome Tax Act as I am not Taxation Expert..

As far as purchase of the property in two names jointly is concerned both A & B will have equal share under the provisions of Transfer of Propertyy Act in absence of an awarment in the purchase document about the funds given only by A and about the shares of each A & B .

RASIK DAGLI

Advocate..

bhagwat patil (Property due diligence 9422773303) 17 April 2010

It is joint property of both. As the saledeed is silent in shares by nature it is equal.both r 50% partners.

Ashok Monga (Adviser) 18 April 2010

Will it change the position if B states in writing that it has no share in the property in question and that her name was added out of natural love and affection.

Rasik Dagli (Lawyer) 18 April 2010

No. If "B" states in writing that he has no share, it will not change the position. "B" can release his share only by a deed o frelease duly registered with proper Stamp Duty.

RASIK DAGLI

Advocate.

Ashok Monga (Adviser) 19 April 2010

Gentlemen

Thank you.

Following from this, if the property is sold and new property/investment is made in joint names, the IT Return will also be required to be filed by both joint owners individually. I will go through the IT Return format to see how the computation of LTCG is done and will this increase or decrease the overall LTCG.

Ashok Monga