Income tax regime for the sale of property received as alimony by a divorced woman – explained
What are the tax implications of selling a home that is paid as alimony for a divorced person? Can she save taxes by reinvesting the money?
Answer: The entire purchase price received on the sale of real estate received as alimony in a divorce is not treated as taxable income. The capital gains realized on the sale of this property are subject to tax. For the calculation of the capital gain, in cases where the seller did not pay for it himself, e.g. B. in the case of gifts or inheritances, the amount paid by the previous owner or owners should be used as a cost.
What are the tax implications of selling a home that is paid as alimony for a divorced person? Can she save taxes by reinvesting the money?
Answer: The entire purchase price received on the sale of real estate received as alimony in a divorce is not treated as taxable income. The capital gains realized on the sale of this property are subject to tax. For the calculation of the capital gain, in cases where the seller did not pay for it himself, e.g. B. in the case of gifts or inheritances, the amount paid by the previous owner or owners should be used as a cost.
Whether such an asset should be treated as current or non-current depends on the combined holding period from the date of purchase for consideration. If the combined holding periods are 24 months or more, the gains will be taxed as long-term capital gains. It should be noted that in such cases, while the cost and holding period of the previous owner must be taken into account, if one strictly adheres to the indexing The im, you will not be able to reap the benefits of indexing from the date of purchase by the original buyer Legal language used by law is available from the date the giftee becomes the owner of that asset. However, some Supreme Courts have ruled that the benefits of indexation are available for consideration from the date of purchase.
Whether such an asset should be treated as current or non-current depends on the combined holding period from the date of purchase for consideration. If the combined holding periods are 24 months or more, the gains will be taxed as long-term capital gains. It should be noted that in such cases, while the cost and holding period of the previous owner must be taken into account, if one strictly adheres to the indexing The im, you will not be able to reap the benefits of indexing from the date of purchase by the original buyer Legal language used by law is available from the date the giftee becomes the owner of that asset. However, some Supreme Courts have ruled that the benefits of indexation are available for consideration from the date of purchase.
When selling the apartment received as maintenance, you can claim the income tax exemption according to § 54 if you invest the indexed capital gains in the purchase or construction of another house within a certain period. In addition and as an alternative, you can invest up to 10% of the capital gains in capital gains bonds from certain financial institutions within three years of the sale of the residential property ₹50 lakhs a year.
When selling the apartment received as maintenance, you can claim the income tax exemption according to § 54 if you invest the indexed capital gains in the purchase or construction of another house within a certain period. In addition and as an alternative, you can invest up to 10% of the capital gains in capital gains bonds from certain financial institutions within three years of the sale of the residential property ₹50 lakhs a year.
(Balwant Jain is a tax and investment professional and can be reached at jainbalwant@gmail.com and @jainbalwant on his Twitter account.)
(Balwant Jain is a tax and investment professional and can be reached at jainbalwant@gmail.com and @jainbalwant on his Twitter account.)
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