FAQ: Can capital gains exemption on joint property purchase be claim? – Property Hotline

Expert: Suresh Surana, Founder of RSM Astute Consulting.

Question: Trevor says he sold his house in Jabalpur for Rs 2.5 crore. The house was registered in his name. He says he is liable to pay long-term capital gains tax of approximately Rs.1 cr as per current rules. In order to save on capital gains tax, he is planning to buy another house in Secunderabad for approximately Rs. 1 cr the same amount as the capital gains tax. He is planning to buy a property in Secunderabad jointly with his wife. Is this permissible? Will he get capital gains tax exemption? Is it mandatory for him to buy the new property in his name only?

Answer: You can claim capital gain exemption under section 54 even on joint purchase of property as the provisions of section 54 does not expressly state that the investment should be made in the name of the taxpayer only. However, it would be necessary to stipulate that even though the property is jointly owned for legal purposes. The beneficial ownership of the entire property is with you and for tax purposes; you must reflect the same in your tax return only.

The capital gains tax exemption benefit cannot be denied as long as the whole of the consideration flows from the taxpayer.