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Income Tax · Capital gainsJointly owned property sale: how each owner reports capital gains
When a property owned by two or more people is sold, each co-owner is taxed separately on their share. The share depends on ownership and contribution – and clubbing rules may apply between spouses. Here is how to compute, report and claim exemptions, with examples.
Most Indian homes are bought jointly – by spouses, a parent and child, or siblings. When such a property is sold, the capital gain is not taxed as one figure. Each co-owner is a separate taxpayer and reports their own share of the gain, pays their own tax and claims their own exemptions.
How the share is determined
- Shares in the sale deed – e.g. "50% each" or "70:30".
- If not stated, contribution to the purchase price (including loan repayment).
- If neither is clear, equal shares.
The share in sale consideration, cost and expenses follows the same ratio.
Clubbing between spouses
If a husband pays the entire price and adds his wife as co-owner without consideration, income from her share – including capital gains – may be clubbed in his hands under the clubbing provisions (old Section 64). Where both spouses contribute from their own income (e.g. joint home loan repaid by both), each is taxed on their own share. Clubbing does not apply between a parent and an adult child in the same way, but a gift from parent to child of funds is exempt for the child, and the child's share is taxed in the child's hands.
Worked example 1: 50:50 couple, both contributed
Example: Vivek and Pooja bought a flat in Rohini Sector 9 in 2014 for ₹50,00,000 (all-in), contributing equally. They sell it in November 2025 for ₹1,30,00,000 with brokerage of ₹1,30,000. CII: 2014-15 = 240; 2025-26 = 376.
| Total | Vivek (50%) | Pooja (50%) | |
|---|---|---|---|
| Net consideration | ₹1,28,70,000 | ₹64,35,000 | ₹64,35,000 |
| Cost | ₹50,00,000 | ₹25,00,000 | ₹25,00,000 |
| LTCG (no indexation) | ₹78,70,000 | ₹39,35,000 | ₹39,35,000 |
| Tax @ 12.5% | ₹4,91,875 | ₹4,91,875 | |
| Indexed cost (×376/240) | ₹78,33,333 | ₹39,16,667 | ₹39,16,667 |
| LTCG (indexed) | ₹50,36,667 | ₹25,18,333 | ₹25,18,333 |
| Tax @ 20% | ₹5,03,667 | ₹5,03,667 |
Option A (12.5%, no indexation) is slightly cheaper for each. Each pays about ₹4.92 lakh plus cess – unless each reinvests in a house under Section 54 or buys 54EC bonds of up to ₹50 lakh each. Together they can invest up to ₹1 crore in 54EC bonds, because the limit is per taxpayer.
Worked example 2: unequal contribution
Example: A plot in Narela was bought for ₹20 lakh by Mr Kumar (₹15 lakh) and his son Rajat (₹5 lakh, from his own salary), but the deed is silent on shares. It is sold for ₹60 lakh. The shares would be 75:25 based on contribution. Mr Kumar reports gain on ₹45 lakh of consideration and ₹15 lakh of cost; Rajat on ₹15 lakh and ₹5 lakh.
TDS by the buyer
The buyer deducts 1% TDS where the total consideration (or stamp duty value) is ₹50 lakh or more. With two sellers and one buyer, two statements are filed, one per seller, each showing the seller's share. From 1 April 2026 this is done through Form 141, and the buyer issues Form 132 to each seller. See TDS on property purchase.
If one seller is a non-resident, TDS for that seller is under Section 195 (Section 393(2)) at a higher rate on the gain – the buyer needs a TAN for this route (Budget 2026 proposed relief for resident individual buyers from 1 October 2026, as reported).
Exemptions per co-owner
- Section 54: each co-owner invests their own gain in a house – jointly or separately.
- Section 54EC: up to ₹50 lakh per person.
- CGAS: each co-owner opens their own account if needed.
Reporting
- Each co-owner reports their share in Schedule CG with the full property details, share percentage, buyer's PAN and TDS credit.
- Mention the ownership share consistently in all returns.
- AIS will show the sale against each seller's PAN if the buyer has filed correctly.
Common mistakes
- One co-owner reporting the full gain, the other nothing – mismatch with AIS and TDS.
- Ignoring clubbing where a non-earning spouse is co-owner.
- Claiming a single ₹50 lakh 54EC limit for both, or exceeding it individually.
- Buyer filing one TDS statement for all sellers.
Key takeaway
Joint property means separate gains, separate tax and separate exemptions for each co-owner, in the ratio of ownership. Spouses should check clubbing. Plan exemptions per person to use the limits fully. Our tax planning team prepares co-owner-wise computations for property sales.
Official references
Official sources to verify the current text, notifications and circulars:
Frequently asked questions
Is capital gain on joint property split equally?
It is split in the ratio of ownership stated in the sale deed. If no shares are specified, contributions to the purchase price are usually taken; failing that, equal shares.
My wife is co-owner but I paid the full price. Who pays tax?
Where a spouse is a co-owner without contributing, her share of income from that property may be clubbed with yours under the clubbing provisions, because the asset was effectively transferred to her without adequate consideration.
Does each co-owner get the ₹10 crore Section 54 cap separately?
Each co-owner claims exemption on their own gain, subject to the conditions and cap, by investing in a residential house in their own name or jointly.
How does the buyer deduct TDS when there are multiple sellers?
The buyer deducts 1% (for resident sellers) on the amount paid to each seller and files a separate statement for each buyer–seller combination, showing each seller's share.
Can co-owners invest in one new house jointly for Section 54?
Yes. Each co-owner's investment share counts towards their own exemption.
What if one co-owner is a minor?
The minor's share of gain is usually clubbed with the parent having higher income, subject to the clubbing provisions.
Should the sale deed state shares?
Yes. Clear ownership shares in both purchase and sale deeds avoid disputes over how the gain is divided.
This article is general information on the law as on 10 November 2026, written for educational purposes. It is not professional advice for your case. Section numbers under the Income-tax Act, 2025 should be confirmed with the official section mapping on the Income Tax Department website before use in filings.
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