Tax solely on capital beneficial properties from the sale of actual property acquired as alimony in divorce proceedings

What are the tax implications of selling a home that was received as alimony at the time of divorce? Can a divorced woman save on taxes by reinvesting the money?

Answers: The amount received from the sale of property as alimony in a divorce is not treated as taxable income in its entirety. The only taxable component is the capital gains realized on the sale of such properties. For purposes of calculating the capital gain, in those cases where the seller has not paid for it himself, as in the case of gifts, inheritances, etc., the amount paid by the previous owner or owners is to be treated as a “cost of acquisition”. ” for these people

Whether such an asset is treated as a short-term or long-term capital gain depends on the combined holding period of you and the previous owner. If the holding period is 24 months or more, the resulting gains are treated as long-term capital gains.

Note that in such cases, although the cost and holding period of the previous owner must be taken into account, one is not entitled to claim the benefits of indexing by strictly adhering to the language used in the law. However, there are some court rulings stating that indexing should also be allowed from the date of purchase by the previous owner.

Long-term capital gains are taxed at a flat rate of 20 percent plus duty and surcharge, unless an exemption is claimed. If the capital gains are of a long-term nature, an exemption under Section 54 of the Income Tax Act 1961 can be claimed if he/she reinvests the capital gains in the purchase or construction of another home within that specified period. Alternatively, you can also invest the capital gains in capital gains bonds from certain financial institutions.

If the combined holding periods are less than 24 months, the gains will be treated as short-term capital gains and will be aggregated with regular income and taxed at the applicable flat rate.

Can I get an interest-free loan from my relative to pay off my home loan? Is this personal loan taxable at all?

Answers: There is no restriction on who you can borrow money from to buy a home or pay off an existing home loan. The loan can be interest-bearing or interest-free.

If you borrow money from your relatives at interest to pay off your existing home loan, you can still claim the amount of interest paid on that loan under Section 24(b) of the Income Taxes Act 1961. This may be relevant to Note that you cannot claim a Section 80C tax benefit in respect of loan repayment on a loan taken out by a relative. This interest-free loan from your relative is not taxable in your hand.

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