“LOVE IS NOT TAX FREE”

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Query 1]

I am a 69 year old widowed lady. My husband, who was a State Govt. employee, has recently died (on 12th January 2014). He has left 2 Houses at DURG (CG) which are in his name. These houses are at present Rented. In family, apart from me there is one married daughter & one married son. Both are well settled. Presently, I am living with my son, who is working in a PSU. My queries are:

  1. Is it necessary to get the House Property transferred in my Name immediately? I am thinking as my son-daughter are natural heir and after my demise, this property shall be transferred to them & till I am alive, it should remain in the name of my deceased husband, so that I can have some money in the form of rent for my routine expenses. I request for your kind opinion please.
  2. Whether not transferring of the Property will attract future troubles during my lifetime & after that? As these Houses are rented, will not transferring the Property in my name may create any future trouble? What should be the best treatment regarding name transfer of these properties, so that there are nil future complications with respect to the tax liabilities & legal troubles?
  3. If I decide to transfer the Property in future, can I transfer this to my daughter-in-law (with the consent of my Son & Daughter) or my Grand Daughter? [Smt. Pushpa Jain- pushpapkjain@gmail.com]

 

Opinion:

  1. The transfer of the property is advisable as the registered owner of the property is no more. If there is a Will of the deceased, the property could be transferred in favor of the beneficiary mentioned therein or else in favor of the legal heir of the deceased. The income from the property of the deceased would be taxable in the hands of the beneficiary or legal heir, in proportion to their share in the property of the deceased. So, even if the property is kept in the name of deceased husband, the income tax liability would devolve upon the beneficiary or legal heir.
  2. As mentioned, it is always advisable to mutate the property in favor of the surviving members so that, at a future date, at the time of selling or mortgaging or for any other purposes whatsoever, the activity could be initiated without further wastage of time.
  3. If you become the owner of the property of your deceased husband (by virtue of will or consent of other members etc), the same can be gifted to your loving daughter in law. But few lines of caution before you shower your love on her. Any income arising from the assets transferred (which includes gift also) to Daughter-in-law without adequate consideration is subject to clubbing provision and is taxable in the hands of the transferor (i.e., your hands) and not in the hands of transferee (i.e., your daughter in law). Also, if your daughter sells the property during your lifetime, the long term capital gain would be taxable in your hands and not in the hands of your daughter in law.  [Section 64(1)(vi) of the Income Tax Act-1961]. However, gift to Grand Daughter in law is outside the purview of the clubbing provision of Section 64(1)(vi).

 

Query 2]

There are two components in the sale of a flat one is the valuation of flat for stamp duty (market value) and the other is the actual sale price mentioned in an agreement to sale. Generally, there will be much difference in the amount. Kindly enlighten me on the legality of these two components. [n_premkumar@hotmail.com]

Opinion:

The capital gain arising on sale of flat is required to be computed by taking the higher of
a] Stamp duty valuation adopted for levy of stamp duty or
b] Actual sale consideration for which the property is sold.

Effectively, if the property is sold for a value less than stamp duty valuation, the capital gain tax would be payable on the basis of stamp duty valuation whereas if the actual sale price exceeds stamp duty valuation, the capital gain would be required to be computed on the basis of such actual sale consideration.

Query 3]

Kindly let me know if relief U/s 80CC will be available to me if I deposit an amount up to Rs 1 Lacs in FD for five years with my name as the first holder and the name of another person as the second holder or is the FD U/s 80CC has to be done only in the name of the person who seeks exemption from IT? [N. Subramanian-lasomani@hotmail.com]

Opinion:

Yes, you can claim the deduction as the payment is done by you only. There is no bar in incorporating the name of other person as second holder in such case.


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