joint owner in the property. Capital gains shall be computed (for each co-owner separately), by reducing from sale consideration, the indexed cost of acquisition and indexed cost of any renovation along with any expense incurred in relation to the sale of the property. Indexation is available only in case the asset is a long term capital asset, that is, its period of holding exceeds 24 months. Further, capital gains computed can be claimed as exempt from taxation if the sales consideration is used for purchasing a residential property within two years after the date of transfer or constructing the residential property within three years from the date of transfer. Each co-owner shall get this benefit separately. Thus, capital gains arising from the sale of adjacent flats jointly owned by you and your wife can be claimed as exempt by purchasing the
property and such benefit shall be available to you and your wife separately in proportion to the respective share. Alternatively, if you gift the house properties to your children, then no tax will be charged as transfer of property as gifts to relatives are exempt from taxation.
Suraj Nangia Partner, Nangia Advisors LLP