How to avoid paying tax on money got by selling of flat and given to children by mother ?

POSTED BY kunalpost ON April 8, 2014 5:56 pm COMMENTS (13)

Hi,

My father has been purchased a land of my mothers’s name in 1994 and constructed a house on that land.

My father has been passed away in 2011. My mother is a senior citizen. Now she want to sell that house and give the amount of sale to her 3 sons equally so that they can invest this amount in their name or further purchase of home (one of son) or settle the homeloan (another son).

Whether there any tax implications on any of them (Mother or son)? If there is any tax implication how can one avoid that?

Regards,

Kunal

13 replies on this article “How to avoid paying tax on money got by selling of flat and given to children by mother ?”

  1. kunalpost says:

    thanks again…for providing me such a nice information.

    regards,
    kunal

  2. ashalanshu says:

    Dear Kunal, you should arrange house valuation report from Govt. approved valuer in your city to prove construction cost.

    Thanks

    Ashal

  3. kunalpost says:

    thanks.
    one thing more…i don’t have proof of expenses of house construction.
    then how it will be calculated… any one can suggest any figure (in lacs).

    Is there in law for this?

    Regards,
    Kunal

  4. ashalanshu says:

    Dear Kunal, based upon my above reply, the indexed purchase price for plot = 20000 * 970/223 = 89996 Rs.

    Similarly calculate indexed price for other years. Sum up all the costs. this ‘ll be your indexed cost of purchase and construction. Now calculate what’s your indexed capital gain and then decide how to save on capital gain.

    Thanks

    Ashal

  5. ashalanshu says:

    Dear Kunal, now the task is cut out. We need the CII for current FY i.e. 2014-2015as sell of property ‘ll happen. Last year’s CII was 939. this year we can assume it around 970 at least. So please calculate with 970. Later on when the Govt. notifies the actual CII, please update your calculation.

    Thanks

    Ashal

  6. kunalpost says:

    yes it is correct

  7. ashalanshu says:

    Dear Kuntal, OK. Let me put the plot purchase and construction thing year wise. Correct me if I’m wrong.

    Action FY Amount CII of FY

    Land Purchase 1992-93 20000 223

    Foundation 1994-95 100000 259

    Rooms Construction 1995-96 100000 281

    Work up to Roof 1995-96 100000 281

    Roof construction 1996-97 200000 305

    Finishing work 1998-99 300000 351

    Please update me for the above so that we can move ahead for calculating indexed LTCG.

    Thanks

    Ashal

  8. kunalpost says:

    jan 1994 to july 1994 : foundation work, cost = 1 lac

    feb 1995 to may 1995 : four rooms constucted, cost = 1 lac

    dec 1995 to march 1996 : All work done till roof (roof was not cemented), cost = 1 lac

    nov 1996 : roof constructed, cost = 2 lac

    jan 1997 to may 1998 : finishing works like palster, wooden work, flooring, paint etc, cost = 3 lac

    but we dont have documented proof for these expenses.

    regards,
    Kunal

  9. ashalanshu says:

    Dear Kunal, can you provide tentative dates/Months for construction phase?

    Thanks

    Ashal

  10. kunalpost says:

    february 1993 land purchase = 20000

    from jan 1994 to may 1998 house construction on that land = 8 lac

    selling price = 25 lac in may 2014

  11. ashalanshu says:

    Dear Kuntal, I need dates or at least months to ascertain FY for calculating LTCG. Please help me on that count. In case you do not wish to reveal more in open, please feel free to contact me over personal e-mail.

    Thanks

    Ashal

  12. kunalpost says:

    Hi,
    purchase cost of land was 20,000 rs. in 1993. My father constructed a house on that land where construction completed in 1998. There is no proof of house construction cost which was I think round about 7-8 lac.

    Now selling price is about 25 lac. So how much tax she has to pay on this transaction.

    Regards,
    Kunal

  13. ashalanshu says:

    Dear Kunal, with out exact numbers, we can not claim LTCG accrued to your mother and thus we can not tell the tax liability there on.

    Thanks

    Ashal

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