Capital Gain exemption on sale of plot u/s 54F

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  1. S Gupta

    S Gupta New Member


    My father is senior citizen and he had purchased one residential plot three years back, now he has booked one under construction residential flat, some required down payment was done by him but for some payments bank's finance was required but bank refused to give loan to my father due to age factor and no running income so i had to become co-owner in flat as well as co borrower in loan also, now i am paying EMI for bank loan. Now we are considering to sale the plot and payoff all the bank loan which we have taken and i also want to make my father as sole owner of flat and i want to exit from the joint ownership as well as from co-borrower.
    1. Whether the plot which my has hold for more than thee years, would be long term capital asset?
    2. If my father sale the plot and we use all sale proceeds to payoff bank loan, the whole capital gain on sale of plot would be exempt u/s 54F (Sale of plot will not qualify u/s 54)
    3. Since my father would be paying all bank loan, then co-borrower ship will end automatically and what would be the the options available to me to exit from co-ownership also, idea is to just make my father as sole owner of flat
  2. Neha Sharma

    Neha Sharma Active Member

    Dear @S Gupta

    1. The Plot which has been held for more than 3 years would qualify as a Long Term Capital Asset.

    2. Sale of Residential Plot can be considered under Section 54 as well if you can show that there is a temporary room in the plot which is being used for Residential Purpose.

    3. Only the amount invested by your father in his own name would be exempted and not the amount invested in your name. So, to claim capital gains exemption - you would be required to show that you have sold your share to your father.
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