Loss of joint property sale: How to get maximum tax benefit


In the case of joint ownership, all the joint owners can share the capital gain or the loss of capital in proportion to the holdings of the property.

The sale of a home property is considered short-term from an income tax standpoint, if the property is sold within 24 months from the date of purchase or registration, and long-term if sold after the completion of 24 months.

A short-term capital loss can be adjusted against short-term and long-term capital gains, while long-term capital losses can only be adjusted against long-term capital gains. However, the remainder of the short- and long-term losses, if any, can be carried forward by the sales year to 8 years.

In the case of joint ownership, all joint owners can share the loss in proportion to their holdings of the property.

Dr. Suresh Surana, Founder, RSM India, said, “Any property held for more than 24 months is a long-term asset, so any gain/loss from such property is considered long-term capital gain or loss. If the property of a home owned or held by two or more persons is accurate and undetectable in such property, the loss incurred by the sale of the property may be proportionately claimed by the co-owners concerned. Their co-ownership share against the respective capital gains or additional capital losses can be carried forward for adjustment within the next 8 years.”

However, if a person buys a property and registers it in the joint name of a housewife with his / her partner, either the spouse can claim the share of the gain/loss or the husband who made the payments, claim it in full.

A capital loss is divided by the co-ownership ratio between husband and wife, i.e., equal in the case where the husband and wife are joint owners in a property. Perhaps, if the co-ownership share of the spouses is not equal, it can be considered as the basis for determining the co-ownership share in proportion to the amount they initially paid for the purchase of such home appliances.

The husband and wife can claim the loss even if the joint owners are paid equally. Perhaps, if one of the co-owners did not contribute to the purchase of the house property, the other co-owner can claim the full loss. It is noteworthy that by registering the name in the property registry as a joint owner, such persons will not be co-owners of the house property for income tax purposes.

Therefore, in the event of a loss from the sale of home property, both joint holders should claim this share only if both parties have the potential to adjust it against capital gains. Otherwise, if only the earning co-owner has capital gains, the capital loss can be adjusted against it, and that co-owner should claim the full loss.

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