The House loan is borrowed in the joint name for the sake of convenience and the property is recorded as Individual property in the books/records of first holder. Such first property is actually belonging to Taxpayee and the entire benefit of housing loan, as elaborated in the query, is availed by Taxpayee (first Owner of property) only.
If it is so, the provision as mentioned in above para would not apply and Taxpayee's wife would be treated as the Individual owner of the property and the resultant benefit would be available to Taxpayee's wife alone. If however the records/ documents doesn’t justify the single ownership of the house property, then the tax treatment as mentioned as above would be applicable.
Exemption is admissible even if the property is purchased individually:
It is not at all necessary to purchase a joint property to claim an exemption from LTCG. By purchasing two separate property individually also, one can have an exemption from LTCG.
Time Limit to purchase the Property:
Exemption u/s 54 (or u/s 54F,if the asset sold is not a residential house property) is available if the Assessee invests amount of LTCG for purchase of another residental house property.
It is not at all necessary to purchase a joint property to claim an exemption from LTCG. By purchasing two separate property individually also, one can have an exemption from LTCG.
Time Limit to purchase the Property:
Exemption u/s 54 (or u/s 54F,if the asset sold is not a residential house property) is available if the Assessee invests amount of LTCG for purchase of another residental house property.
- within one year before or two years after the date of transfer, or
- constructs a residential house within a period of three years from the date of the transfer of the original house.
Scheme to Deposit:
Although under section 54/54F,the assesee is allowed 2 years to purchase the house property,but the capital gain on transfer of the origional assets is taxable in the previous year in which the transfer took place. The return of income of the previous year is to be filed before the specified date Hence , the assessee will have to take a decision for the purchase/ construction of the house property before the date of furnishing of the return otherwise the capital gain would be taxable.
To avoid the above situation, the income Tax Act has specified an alternative in the form of a Deposit under the Capital Gain Deposit Accounts Scheme-1988 (CGDAS).
The amount of the capital gain, which is not utilized by the assessee for purchase or constructions of the new house before the date of furnishing the return of income, should be deposited by him under the Capital Gain Account Scheme, before the DUE DATE of furnishing the return. After deposits, the amount already utilized by the assessee for purchase/constructions of the new house along with the amount so deposited, shall be eligible for exemption under section 54/54F in the year in which LTCG has arisen.
The investment in the PLAIN FIXED DEPOSITS may not enable you to claim an exemption. Ensure to keep the amount in the CGDAS.
However, one can keep the amount in the plain fixed deposits after the sale of the property and can divert it in the CGDAS before the due date of filling the return of income.
It may be noted that under CGDAS also, two type of accounts can be opened as under-
Although under section 54/54F,the assesee is allowed 2 years to purchase the house property,but the capital gain on transfer of the origional assets is taxable in the previous year in which the transfer took place. The return of income of the previous year is to be filed before the specified date Hence , the assessee will have to take a decision for the purchase/ construction of the house property before the date of furnishing of the return otherwise the capital gain would be taxable.
To avoid the above situation, the income Tax Act has specified an alternative in the form of a Deposit under the Capital Gain Deposit Accounts Scheme-1988 (CGDAS).
The amount of the capital gain, which is not utilized by the assessee for purchase or constructions of the new house before the date of furnishing the return of income, should be deposited by him under the Capital Gain Account Scheme, before the DUE DATE of furnishing the return. After deposits, the amount already utilized by the assessee for purchase/constructions of the new house along with the amount so deposited, shall be eligible for exemption under section 54/54F in the year in which LTCG has arisen.
The investment in the PLAIN FIXED DEPOSITS may not enable you to claim an exemption. Ensure to keep the amount in the CGDAS.
However, one can keep the amount in the plain fixed deposits after the sale of the property and can divert it in the CGDAS before the due date of filling the return of income.
It may be noted that under CGDAS also, two type of accounts can be opened as under-
- Deposit Account A- This is a saving Account.
- Deposit Account B - This is a term Deposit Account
Investment in Capital Gain Bonds:
Exemption can be claimed either by investing in the Bonds u/s. 54EC or u/s. 54 by investing in the house property. Assessee have the choice.
Exemption can be claimed either by investing in the Bonds u/s. 54EC or u/s. 54 by investing in the house property. Assessee have the choice.
1 comment:
nice post
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