Capital gains on sale of ancestral house
This query is : Resolved
02 April 2014
my father along with 3 brothers and a sister sold a house in bangalore through court auction on 5th May 2013 for Rs.2.7 chores. Each got a share of 54 lakh. The property was purchased in 1908 by my father's grandfather. money was paid by court to sharers in Dec 2013. what is the tax implication
Nikhil Kaushik
(Expert)
03 April 2014
first of all, compute the fair value of the house as on 1 April 1981. for this you shall require a valuation done by a property valuer.
once the value is arrived at, index it to the Financial year 2013-14.
If any improvement has been done from 1981-2013 to the property, index that cost too.
from 2.7 cr subtract the indexed value of the property and the improvement cost to arrive at capital gains.
Divide the capital gains in five equal part.
now each sibling has the option to either pay 20% capital gains tax on his share of capital gains or to invest the capital gains so earned into another residential property (under section 54) or certain bonds (under section 54ec) to claim exemption.
once the value is arrived at, index it to the Financial year 2013-14.
If any improvement has been done from 1981-2013 to the property, index that cost too.
from 2.7 cr subtract the indexed value of the property and the improvement cost to arrive at capital gains.
Divide the capital gains in five equal part.
now each sibling has the option to either pay 20% capital gains tax on his share of capital gains or to invest the capital gains so earned into another residential property (under section 54) or certain bonds (under section 54ec) to claim exemption.
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