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POSTED BY ON April 7, 2013 9:25 pm COMMENTS (14)
Hi,
I need help in investing my dad’s capital gains from house sale in best way with your help.
We have sold our 23 years old 1 bhk flat which was on my dad’s name for 9.3 lacs.
Question 1: My dad is 60+. What is the best way for him to invest this capital gains from house sell. Will this amount be taxable if not invested in another property ? What is the best plan for senior citizens ?
Question 2: I am transfering my home loan to SBI Max Gain. Can I park my dad’s amount in my sbi loan account’s OD as a surplus to save interest on my home loan?
Experts please give your valuable advice. Thanks in advances
_nups_
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Dear Nups, by parking the 9L Rs. into your MG account, you are saving on interest outgo but this saved interest is not adjusted towards your outstanding loan balance as it happens in normal home loan, so your loan ‘ll complete the regular 18Y term but yes due to parked surplus amount your interest outgo ‘ll be lower than normal home loan.
Thanks
Ashal
Actually I used an sbi max gain calculator to calculate it..
Say I park 9 lac of amount in MG..so for my loan amount of 19 lacs I will be charged interest on only 10 lacs right ? So will not that clear the principal faster ? as my interest is saved for 9 lacs? Can you please how will it work in my case
Loan amount is 19 lacs
Tenure is 18 years
Interest is 9.95
I park 9 lacs in OD
Dear Nups, who said your loan ‘ll be over in 5Y? I think you have not understood Max Gain working. In case of surplus parked by you in MG, the interest outgo ‘ll be lower or zero but the loan ‘ll run it’s normal term. The interest part of your EMI ‘ll not go towards principal automatically as like normal home loan.
thanks
Ashal
Index in 1988-89 = 161
Index in 2012-13 = 852
Index purchase Value = 160000 (852/161) = 846710
Sale Value = 930000
Capital Gains = 930000-846710 = 83292
Tax @20.6% = 17,160
Hi Ashal,
Can you please also let me know how did you calculate the tax from capital gain?
_nups_
Dear Nups, the rounded off Capital Gain amount to your father is 83300 Rs. so in case your father wants to pay tax, the amount @ 20.6% = 17160 Rs.
After paying this 17160 Rs. tax, the balance amount of 913000 Rs. (rounded off), he can gift to you & you can accept the cheque directly into your max gain account. Now it’s your capital & there ‘ll not be any tax on you for this money transfer. till this money remains in max gain account, no tax but if you put this 9.13L Rs. amount into bank Fd & earning interest from that bank FD, the interest income is taxable & you w’d have to pay tax on interest income as per your slab rate.
Sprite…. Clear hai? 🙂
thanks
Ashal
Thanks Ashal,
THats a good news for me and I think its the best option to invest that amount in my SBI Max gain OD account once tax of 17k is paid. I will save nearly 11 lacs interest as well as I loan tenure will be reduced from 18 years to 5 years..
Please let me know if my calcucation and decision is correct or is there any catch here?
Thanks all for your help here…
best wishes…
_nups_
Thanks for the info Ashish Jauhari, however your statement is bit confusing to me..
You said The tax if any ‘ll be due on Son not on father. This is understood
In case of parking the amount in Max Gain, there ‘ll not be any tax. No max to me(Nups) ??
In ref with your previous response the property purchase date is 1988-89 and selling date is 2012-2013
Thanks again for your help guys..
I justed wanted to know if my dad’s capital gains can be used (with any taxes to my dad as he is a senior citizen) in my SBI max gain plan(without me applicable for tax for that money). This will benefit me as almost 11 to 12 lacs of my interest will be saved as well as I can give my dad monthly roi for that amount which can be of 9.95% which can be the highest if compared to any other scheme. I may be asking for too much but just wanted to know a good way to save tax and utilize the amount in the right way..
Dear Ashish, once the father in question pays his due taxes & gift the residual amount to his son, it’s Son’s capital & he is free to use it as per his choice. The tax if any ‘ll be due on Son not on father. In case of parking the amount in Max Gain, there ‘ll not be any tax.
Thanks
Ashal
Hi All,
I would also like to understand the query here, as it may turn out to be useful for me somewhere in future.
Assume, if Nups’s father pays taxes on 98,000 (capital gain from selling the property) and then gift the balance proceedings to Nups then will there be any tax liability remaining in the hands on Nups?
Ashish
Dear Nups, can you confirm the applicable FYs? Is it 1988-89 or 1989-1990 for purchase year? what about sell FY also? If you are not providing correct info, how can I calculate my dear friend?
Thanks
Ashal
THanks for your responses Ashal and Finhealth.
@Ashal: Property was bought in the year 1989 =160000/- and sold in 2013=930000
I did calculate the tax online and that comes around at 98000. Can you please confirm ?
@Finhealth:- Yes I was aware of section 54 however wont get even a 1 BHK in that rate I guess. I have also heard that NABARD bonds/investments in nationalised banks will help for tax exemption. Is that true ?
Dear Nups,
With respect to your first query, if the capital gain was earned in the current financial year you can save taxes by reinvesting the money as per the provisions of section 54. This is the only option by which your dad can save taxes on the capital gains that he made by selling the property. Any other kinds of transfer wont help.
Also as far as your second query is concerned transferring your Dads money to your account also won’t save any taxes. Though can obviously save interest if the conditions of your loan says so.
Hope this resolves your query.
Rgrds,
Finhealth
Dear Nups, what’s the indexed capital gain amount for your father? if you & your loan is not in picture, how your father ‘ll save his tax liability if any & w’d like to invest his hard earned money?
Thanks
Ashal