Sale of a home house normally outcomes in get. However, in case of sale in an emergency scenario, the owners may well have to sell the house at a loss. Such gains and losses may well be of two sorts – brief term and extended term.
Sale of a home house is deemed brief term from the revenue tax point of view, if the house is sold inside 24 months from the date of acquire/registration, and extended term, if it is sold right after the completion of 24 months.
A brief-term capital loss may well be adjusted against each brief-term and extended-term capital gains, even though a extended-term capital loss may well only be adjusted against extended-term capital gains. However, the remaining aspect of each brief-term and extended-term losses, if any, may well be carried forward up to 8 years from the year of sale.
In case of joint ownership, all the joint owners may well share the loss as per the proportion of their holding in the house.
“Any property held for a period of more than 24 months would be a long term asset and consequently, any gain/ loss arising from the same of such property is treated as long term capital gain or loss. In case of a house property which is co-owned or held by two or more persons and their shares in such property are definite and ascertainable, the loss arising from the sale of the property can be claimed by such respective co-owners in proportion to their co-ownership share against their respective capital gains or excess capital losses, which is not set off can be carried forward for adjustment in the subsequent 8 years by them,” stated Dr. Suresh Surana, Founder, RSM India.
Do you will need to invest only the get quantity or complete sale worth of home house to save tax?
However, if a house is bought by a particular person and get it registered in joint name with his/her spouse, who is a housewife, either each of them may well claim the share of get/loss or the husband, who in fact made payments, may well claim it wholly.
“The capital loss would be apportioned between the husband and wife in their co-ownership ratio i.e. equally as in the given case where both the husband and wife are joint holders in a property. In case, where the co-ownership share of husband and wife is not equal, then in the ratio of the sum contributed by them initially for purchase of such house property can be taken as the basis for determination of the share of co-ownership. The losses can then be accordingly claimed by the husband and wife, even if the payment has been made equally to both the joint owners. In case, if one of the co-owners has not contributed any sum towards the purchase of the house property, then the other co-owner may claim the entire loss. It is notable that merely by registering the name in the registry of property as a joint owner does not in itself make such person co-owner of the house property for income tax purposes,” stated Dr. Surana.
So, in case of loss from sale of a home house, each the joint holders must claim the share, only if each of them have the prospect of adjusting it against capital gains. Otherwise, if only the earning co-owner has capital gains, against which the capital loss may well be adjusted, it will be far better that the complete loss is claimed by that co-owner.