Your questions: reinvest the proceeds from the sale of gold in real estate to benefit from a tax exemption
By Chirag Nangia
My daughter wants to sell gold jewelry that I gave her when she got married nine years ago and invest the proceeds to buy land for building a house jointly with her husband. The invoices for the initial purchase of the jewelry were issued in my name. Will the proceeds of the sale be taxable?
Yes, the sale of gold jewelry will incur a tax on capital gains realized in your daughter’s hands and the cost at which you acquired it will also be treated as the acquisition cost for your daughter, since the same was offered at her wedding. . As the jewelry has been held for more than three years, it will be long-term capital gains therefore the proceeds of the sale must be reduced by the indexed acquisition cost, to arrive at a capital gain which will be taxed at 20% rate. However, if the proceeds of the sale are reinvested to purchase residential property, capital gains proportional to the amount reinvested may be declared tax-exempt under Section 54F.
I am in the 30% tax bracket. Can I transfer all my savings to my spouse’s name as a gift and invest in the same way as a fixed deposit? Is there a limit on what donations can be considered tax exempt?
Although the money you transfer is not considered a taxable transfer and does not result in any tax in the hands of your spouse, however, the interest earned on it will be clubbed in your hands in accordance with the Law of income tax.
I want to repay my mortgage early because I have some money selling an apartment. Is there a tax benefit for the prepayment and how will I claim it?
The early repayment of a mortgage does not lead to specific advantages while the advantage of mortgage repayment is provided. However, these benefits differ depending on when the loan is repaid. If repayment is made after acquisition / construction, the total amount of principal paid during a fiscal year may be deducted from total gross income under section 80C before calculating net taxable income. Interest payment can be claimed as a deduction under section 24, up to Rs 2 lakh for independent property if construction is completed within five years of the end of the financial year when the property was purchased / built.
The writer is director, Nangia Andersen Consulting. Send your questions to [email protected]