Need Help with CG Exemption on Property Sale & Purchase with co-owner

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Your mother may claim capital gains exemption under Section 54 of the Income-tax Act, 1961 (corresponding provision under the Income-tax Act, 2025), provided the property sold was a long-term residential property and the statutory conditions are fulfilled. The exemption is not automatically restricted to 50% merely because the newly purchased flat is jointly owned. If your mother contributes ₹1 crore from her sale proceeds and you contribute ₹35 lakh through a home loan, she may claim exemption to the extent of her eligible investment, subject to the actual long-term capital gain. However, the ownership and contribution ratio should be clearly documented. The absence of an ownership ratio in the registered Agreement for Sale may create difficulties in establishing your mother’s beneficial ownership and investment. I recommend obtaining a supplementary agreement or written confirmation from the developer specifying the respective ownership shares and contributions. Preserve bank statements, payment receipts and loan disbursement records as supporting evidence. Please note that exemption is calculated on the eligible capital gain, not automatically on the entire sale consideration. The applicable purchase/construction deadlines and other statutory conditions must also be satisfied.

Advocate Suyash Jadhav LawRato