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A Mumbai couple’s savvy property-selling strategy went viral, reportedly helping them save over Rs 4 crore in capital gains taxes.
Mumbai woman legally saves huge taxes after selling a house worth nearly Rs 6 crore. (Representative Image)
A Mumbai couple’s clever tax planning, which helped them legally save a substantial amount, recently went viral in a video by a social media influencer. The clip explained how the husband and wife managed to save lakhs in taxes despite selling a house worth nearly Rs 6 crore and earning significant capital gains.
According to financial adviser Anushka Rathod, the wife purchased two flats in Hiranandani Gardens, Powai, Mumbai, in 2002, one for Rs 34,51,000 and the other for Rs 17,40,000, jointly in her and her husband’s names. Later, in 2015, the husband bought another property in Lodha Estrella, this time solely in his own name.
The husband then played a crucial money trick in 2017, gifting the wife 50 per cent of his share of the Powai property through a legal gift deed and making her the 100 per cent owner of their Hiranandani Garden residence.
Wife Claims Section 54 Tax Exemption Benefits
Three years later, the man’s wife sold the two properties located in Hiranandani Gardens for Rs 5.98 crore. The woman calculated that her long-term capital gains from the sale stand at Rs 4,21,83,273 and went on to claim tax exemption benefits under Section 54, pertaining to the purchase of another immovable house property from her husband of Rs 3.85 crore.
In March 2021, the wife spent the money she received from the sale of the two Hiranandani Gardens properties on buying her husband’s Lodha properties, purchased by the man six years earlier. The lady claimed the Section 54 long-term capital gains and evaded significant property tax. The relief was given in accordance with the country’s Income Tax Act.
Couple Legally Saves Tax Via Smart Property Planning
“Normally, such heavy capital gains would mean huge taxes for Indian citizens,” explained Rathod. “However, the couple had planned well. They used Section 54 of the Income Tax Act.” The concerned property law in this scenario simply states, “If you sell a house and buy another house with the gains made within the following two years, you don’t have to pay any capital gains tax.”
Therefore, despite achieving an LTCG of Rs 4 crore (after factoring the indexation or inflation), the wife didn’t owe any income tax to the authorities because she reinvested the money to buy her husband’s Lodha house property in a case that should inspire many citizens to do efficient money and property planning and take advantage of various tax exemption benefits offered by the Indian government.
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