How to claim tax benefits on gifted property?- Property Hotline

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Expert: Suresh Surana, founder of RSM Astute Consulting.

Question: A woman I know owns an NA plot. She plans to gift it to her children and wants to know which is the most tax efficient manner to do so? She wants to know which of the following she should opt for:-

1. Gift it to the children, who will then sell it to a builder.

2. Sell the property and gift the sale proceeds to the children.

Which option should she opt for? Is there a better option?

Answer:

Option1:- At the time to gift the house property to children, -No tax incidence either in the hands of donor or donee. At the time of sale of property by children:

1. Separate Slab benefit can be claimed by each child against the capital gain.

2. Each child shall have the opportunity to claim the re-investment benefit under section 54F/ 54EC

Option2:- On sale of property by mother:

1. No Exemption u/s 54F, as entire sale proceed is being gifted

2. She can claim basic exemption limit against the amount of capital gain.

At the time of gift of sale proceeds to children, -No tax incidence either in the hands of a donor or done.