LTCG tax exemption on selling jointly owned property

A reader named Shubham Agrawal addressed queries from ET Wealth regarding the exemption on Long-Term Capital Gains (LTCG) when selling jointly owned property. If the property was funded entirely by the individual, they can purchase the new reinvestment property solely in their name. It is crucial that the buyer deducts TDS only in their name during the sale of the jointly named property and reports the 100% sale and capital gain in their income tax return.

Evidence of the original purchase payments should be maintained to establish that the entire investment was made by the individual. If the individual's wife is not informed that the income belongs to another PAN/family member, they may receive a notice for non-reporting. The expert suggests that co-owning two houses disqualifies the individual from claiming Section 54F exemption on their third flat, but there have been instances where tribunals have ruled otherwise.

In such cases, it is recommended to consult a chartered accountant, as it may involve legal costs, potential duration of litigation, and interest and penalties if the case is not favorable.