What is the best method of transaction so that a NRI can pay the minimum capital gains tax, registration tax and is able to repatriate the sale proceeds of a house?
Question asked by Mr. Vishal Sinha from USA :
Dear Sir, I am an Australian citizen and currently on work visa in USA for the past 2 years. I was born in India and my parents/brothers are settled there and hence I have a PIO (Person of Indian Origin) card. I need to assist my brother with 13 Lakhs INR rupees that I will send from USA. In Lieu of this my mom would like to give a house that is in her name to me. The house is worth 40 lakhs INR that she has built 15 years ago. My question is what is the best method of transaction so I pay the minimum capital gains tax, registration tax and am able to repatriate the sale proceeds of the house when I sale it later while claim the 13 lakhs that I am going to send now. What happens if my mom sells the house herself in 40 lakhs INR and then gifts the cash to me? Do I need to pay any tax on this cash? Can I repatriate this cash to USA/AUSTRALIA?
In place if she gifts the house to me, When I sell the house, do I have to pay capital gains on whole of 40 Lakhs INR or just the (sale price – cost of building the house that my mom spent)?
Third option would be that mom could sell part of the house to me and part of the house gives me as gift to counter the 13 lakhs INR that I am paying her. She will then give 13 lakhs INR to my brother who has already a loss of 13 lakhs in his business.
I need to know what is the best option where for getting the control of the house and immediately and have to pay less taxes.
Thank you for your help!
Vishal Sinha
USA
In place if she gifts the house to me, When I sell the house, do I have to pay capital gains on whole of 40 Lakhs INR or just the (sale price – cost of building the house that my mom spent)?
Third option would be that mom could sell part of the house to me and part of the house gives me as gift to counter the 13 lakhs INR that I am paying her. She will then give 13 lakhs INR to my brother who has already a loss of 13 lakhs in his business.
I need to know what is the best option where for getting the control of the house and immediately and have to pay less taxes.
Thank you for your help!
Vishal Sinha
USA
Vatsala Answers:
1) Your mother can sell you the property for Rs. 13 lakhs. After the sale, it will be taxed in the hands of your mother for a notional value which will be the guideline value. i.e., you mother’s capital gains will be taxed using the notional value as her deemed cost of sale. When you sell the property, the amount you have invested to purchase it can be repatriated, subject to compliance with tax laws and a ceiling of 1 million U.S. dollars per financial year. But if you show low cost of acquiring the asset in the sale deed, the capital gains will be more at the time of sale in your hands. There will be no notional cost of acquisition. But in India you can get around this by showing a lesser value in the sale deed when you sell the asset. This way your capital gains can be reduced.
2) There is no tax on cash gifts from mother to son.
3) If the house is gifted to you, the guideline value will be taken as the notional value, which is used to compute the cost of acquisition in your hands.
4) You cannot partly gift and partly sell the same property.
Vatsala
2) There is no tax on cash gifts from mother to son.
3) If the house is gifted to you, the guideline value will be taken as the notional value, which is used to compute the cost of acquisition in your hands.
4) You cannot partly gift and partly sell the same property.
Vatsala
Popularity: 7% [?]
Tell A Friend