DelhiDesk The article is a response to a reader’s query about the capital gains tax implications of selling a house that was constructed in 2014 on a plot originally owned by their father. The reader’s mother gifted the house to their NRI daughter in 2016, and now the daughter intends to gift it back to the reader in 2023 for sale. The article advises that the date on which the father became the owner of the property will be considered for the purpose of indexation of cost and calculation of capital gains. The reader will be allowed to reduce the indexed cost of acquisition from the selling price and can also consider the cost of improvement made and index that according to the year in which the improvement was made and reduce it from the sale price to arrive at capital gains. The capital gains will be taxed at 20% after indexation, but the reader can save tax on these capital gains by investing them to purchase a new house or buying capital gains bonds or depositing the money in a capital gains account scheme and complying with the stipulations to claim an exemption from tax on capital gains.
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👉 The house was built using the savings after demolishing the old house built by the father in parts in 1971 and 1979.
👉 The construction was completed in 2016 and gifted to the NRI daughter by the mother.
👉 The daughter intends to gift the house back to the mother in 2023.
👉 The mother plans to sell the house and wants to know the capital gains tax implications.
👉 The original owner of the property was the father.
👉 The date on which the father became the owner will be considered for indexation of cost and calculation of capital gains.
👉 Indexed cost of acquisition and cost of improvement can be reduced from the selling price to arrive at capital gains.
👉 Capital gains will be taxed at 20% after indexation.
👉 Tax on capital gains can be saved by investing in a new house, capital gains bonds, or capital gains account scheme.
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