Capital gain in case of inherited property

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KhushiJ (Querist)
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28 July 2017 1) MR A AND MRS A OWNED A HOUSE PROPERTY JOINTLY.
2) MR A DIES
3) NOW, THE PROPERTY IS INHERITED BY MRS A, AND HER TWO CHILDREN I.E. MR B (SINGLE SON) AND MRS C (MARRIED DAUGHTER)
4) NOW THE SAID HOUSE PROPERTY IS BEING SOLD. AND THE SALE CONSIDERATION WILL BE RECEIVED BY ALL THREE OF THEM EQUALLY
5) WHAT ARE THE TAX CONSEQUENCES IN THE HAND OF EACH OF THE THREE?
6) IN CASE, IF BOTH THE CHILDREN TRANSFERS THEIR PART OF SHARE OF SALE CONSIDERATION TO THE MOTHER LATER ON... WHAT ARE THE CONSEQUENCES OF TAX IN SUCH A CASE?

PLEASE ANS URGENTLY... THANK YOU IN ADVANCE

Amol S Joglekar

Amol S Joglekar (Expert)
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28 July 2017 for finding out if it is long term OR short term, the period of holding of Mr A shall be considered.
Every one out of 3 will be taxed separately.

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KhushiJ

KhushiJ (Querist)
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29 July 2017 SIR, THANK YOU FOR YOUR KIND REPLY.

BUT IN THAT CASE THE DAUGHTER WILL HAVE TO BEAR THE TAXES, SINCE SHE IS NOT GOING TO PURCHASE THE NEW HOUSE. NEW HOUSE WILL BE BOUGHT IN THE NAME OF MOTHER AND SON.

IS THERE ANY WAY OUT FROM WHICH DAUGHTER CAN ESCAPE FROM PAYMENT OF TAXES. AS SUCH SHE IS NOT GOING TO KEEP THE AMOUNT AND WILL TRANSFER THE SAME TO HER MOTHER

ALSO THE SON WILL TRANSFER THE AMOUNT OF SALE CONSIDERATION TO HER MOTHER.

WHAT WILL BE THE TAX LIABILITY OF THREE OF THE IN THIS CASE??

Amol S Joglekar

Amol S Joglekar (Expert)
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29 July 2017 If daughter and son...both of them are going to transfer the money to their mother...and pay the taxes. What difference, according to you, is made if the same money, even though, received by mother...she would have paid the taxes......(I am not able to get convinced on that.....) Can you please put some figure to it , may be imaginary?)

KhushiJ

KhushiJ (Querist)
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30 July 2017 TOTAL Mrs A - Mother Mr B - Son Mrs C - Daughter
SALE CONSIDERATION 2,600,000.00 866,666.67 866,666.67 866,666.67

INDEXED COST OF ACQUISITION
150000
15000
165000
*272/100
448800 (448,800.00) (149,600.00) (149,600.00) (149,600.00)

INDEXED COST OF IMPROVEMENT
130000
*272/100
353600 (353,600.00) (117,866.67) (117,866.67) (117,866.67)

TOTAL 1,797,600.00 599,200.00 599,200.00 599,200.00

DEDUCTION

ON PUR OF HOUSE (1,800,000.00) (900,000.00) (900,000.00) -

net capital gain (2,400.00) (300,800.00) (300,800.00) 599,200.00

is there any way that the daughter can escape the taxes?
can the entire amount of sale consideration be taken by the mother?
if yes, is there any documentation required for the same? since, the revenue records contain name of all three of them.

Amol S Joglekar

Amol S Joglekar (Expert)
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30 July 2017 Since the entire capital gain invested in new asset(Flat), although in the name of mother and son, it will qualify for exemption u/s 54. There are case laws in support of this view. But you need to be ready with contesting the order of AO if goes against you.
You can file online return claiming exemption u/s 54 of 600,000 in each case viz mother, son and daughter

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