Sold a house gifted by your spouse? Here's how the capital gains tax will be calculated

If you gift a house to your spouse and they sell it later, who pays the capital gains tax? Is the profit treated as a long-term capital gain, and how is the holding period calculated?

The income tax department has clarified that when a property is transferred to a spouse as a gift, the original owner's holding period is also counted to determine whether the asset qualifies as a long-term capital asset.

Today's Q&A explains such details in response to a query by a reader.

Since the combined holding period of you and your wife exceeds 24 months, the flat has become a long-term capital asset and the profits on sale of this flat shall be treated as long-term capital gains.

Presuming that the flat was transferred as a gift, the clubbing provisions will come into play, and the long-term capital gains made by her on sale of the flat shall be included in your income, and you will have to pay the tax on it.

Since the flat was acquired before 23rd July 2024, you have the option to either pay tax at 12.50% on the profits made or @ 20% on indexed long-term capital gains.