Selling pre-marriage land? Why routing proceeds to your spouse may not save tax

• Capital gains taxable unless a registered gift deed is executed.
• Register gift deed before sale for spouse to legally receive proceeds.
• Section 54F exemption may apply, but clubbing provisions could still trigger

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Receiving sale proceeds in your spouse’s account doesn’t automatically shift the tax burden, as capital gains tax is decided by ownership and specific tax rules. Today’s Ask Wallet-Wise breaks down whether split land-sale proceeds with a spouse can be claimed for the LTCG exemption under Section 54F.

I’m selling a plot bought in my sole name in 1986 (pre-marriage). The sale will be executed in March 2026. The buyer will pay 60 percent to my account and 40 percent to my husband, deducting 1 percent TDS against each PAN.

Can my husband and I each reinvest our respective sale proceeds in separate homes to claim exemption from the 12.5 percent LTCG tax?

Do I need any documents to gift 40 percent of the land to my husband, beyond routing 40 percent sale proceeds to his account and TDS on his PAN?

Expert’s Advice: Capital gains are taxable in the hands of the actual owner of the property. Since you bought the land in your name before marriage and haven’t gifted any portion to your husband so far, the entire capital gain will be attributable to you and must be reported in your ITR.

While the tax department may not have an immediate way to verify the true ownership in such cases, especially if TDS has been deducted and the sale proceeds are paid to someone who isn’t the actual owner, it can still flag the mismatch if your return is picked up for detailed scrutiny. Hence, it’s advisable to disclose the entire long-term capital gain on your return.

If you want 40 percent of the sale consideration to go to your husband’s account, you should execute and register a gift deed transferring 40 percent of the plot to him. If this gift deed is completed before the sale deed, the buyer can legally pay that portion of the consideration into your husband’s bank account.

Please note that even if your husband receives part of the sale proceeds in his account, the clubbing provisions may still apply to the portion of the plot gifted to him, and the resulting long-term capital gains could remain taxable in your hands.

In this scenario, your husband may still claim exemption under Section 54F. Only the portion of capital gains (if any) attributable to the amount not reinvested in a residential house would be subject to clubbing, as held by the Mumbai Income Tax Appellate Tribunal.