Planning to gift property to your spouse? LTCG may still be taxed in your hands
Arjun Mehta, a 42-year-old salaried professional from Mumbai, gifted a residential property to his wife, Kavya Mehta, aged 39, without any monetary consideration. Although Kavya became the legal owner and later sold the property at a profit, the long-term capital gains (LTCG) were not taxed in her hands. Legally, the recipient spouse becomes the owner, but for tax purposes, LTCG is attributed to the original owner. (Representational photo). (Pixabay) Under Section 64(1)(iv) of the Income-tax Act, income arising from assets transferred without adequate consideration to a spouse is clubbed with the transferor’s income. Therefore, despite Kavya executing the sale, the LTCG was taxed in Arjun’s hands. To avoid disputes, Arjun maintained a properly executed gift deed and clear documentation. However, a minor mismatch in dates between the gift deed and property registration led to an initial query from the tax officer before the claim was accepted. Here’s a look at how income from property gifted between spouses is taxed under clubbing provisions, and why clear documentation and compliance are key to avoiding disputes and ensuring …
