Inclusion of Property in the books of accounts - in the event of death of Father

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This discussion addresses how to include a property owned by a deceased father in the books of accounts of the legal heirs. The primary question revolves around whether an individual heir, who is a co-borrower and solely repays a mortgage loan taken for the property, can add their share of the property and the loan amount to their fixed asset schedule. Experts advise on considering the Fair Market Value (FMV) as of April 1, 2001, and clarify that the loan amount should be treated as an advance against the property rather than added directly to its cost.

Accounts & Tax Consultant

Accounts & Tax Consultant (Querist)
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26 April 2023 Hi Experts,

My Father has passed away on 2021.

We have a land and building on my Father's name which cost as below

Purchase of Land during 1987 Rs. 15000.00
Construction of Building with major and minor improvements Rs. 700,000.00
Re Construction of Building - by Availing Mortgage Loan
of Rs 20 lakhs Rs. 25,00,000.00

Total Cost of Property ( At cost Spent - market rate not considered) Rs.32,15,000.00

MY QUESTION IS

AFTER THE DEMISE OF MY FATHER, WE HAVE GOT THE LEGAL HEIR CERTIFICATE WHICH STATES THE LEGAL HEIRS ARE

MY MOTHER;
MY ELDER SISTER, MYSELF AND
MY YOUNGER SISTER

SINCE IM DOING PROFESSION AND PAYING INCOME TAX AS WELL AS THE ENTIRE LOAN AS STATED ABOVE ( TAKEN FOR PROPERTY)

MY QUESTION IS , WHETHER CAN I ADD THE PROPERTY IN TO MY FIXED ASSET SCHEDULE?

IF YES MEANS, WHAT WILL BE THE RATION?

SINCE IM PAYING THE 20 LAKHS LOAN TAKEN BY MY FATHER

WILL THERE BE ANY CHANGES IN RATIOS WHILE CONSIDERING THE PROPERTY

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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26 April 2023 1. Yes, you are the 25% owner of the property.
2. No change in ownership ratio of all the co-owners. The loan can be adjusted against any income from the property.

Accounts & Tax Consultant

Accounts & Tax Consultant (Querist)
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27 April 2023 Respected sir,

Thanks much for your reply

I have few clarifications ;

1. Im the Co- Borrower of the Mortgage Loan taken on the property

2. After the event of my father Demise, im paying the EMI solely ( Without any help from other Legal Heirs)

3. As per your Advise, if I'm considering the 25 % of my share from the property cost
( Rs.32,15,000) my fixed asset will be Rs.803,750.00

3. Since im repaying loan of 20 Lakhs in EMI, can i also add 20 Lakhs in addition to the 803,750.00

Kindly advise

4. In Such case, can i

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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27 April 2023 1. The FMV of the property should be considered as per circle rate of the property as on 01.04.2001.
2. You cannot add loan amount paid to the cost of property, but as loan/advance over the house property, which is to be recovered from all the owners of the property.

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