Tax on sale of inherited property‏

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 February 2013 Dear Sir,

We are a family of 5 and our father had died instate on January 07, 1987 and our mother too passed away on January 02, 2010. Our father had purchased a house property ( 25 cents plot with house ) for Rs. 25,000/= in the year 1970. Muncipility has issued KHATHA in our name ( 5 children ) on November 21, 2011 being legal heirs and we have also applied ( on February 08, 2013 ) to Sub-register to incorporate our name ( 5 members ) in the government records and get the mutation of records ( MR ) completed. ( This process should take about 3 months. )

We now ( all 5 members ) would like to sell this property for about Rs. 37.5 lakhs.

( a ) Do we have to pay short term capital gain tax, if the property is sold before November 21, 2014 ? If so how can we minimize the tax ?

( b ) If the property is sold AFTER November 21, 2014, what will be long term tax applicable? What are the
options available to minimize the tax ?

( c ) One of my brother is interested in buying the whole plot. Can the other 4 members our family discharge our rights in this property to our brother? Are there any tax implications in this case?

Your early reply will be highly appreciated.

Thanks,

Regards,

R.V.Kamath
9886795163 ( M )
r_v_kamath@hotmail.com

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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13 February 2013 First of all , since the property has been received in inheritance, you need not to
think about short term. It is a long Term capital Asset.
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Valuation Report of Plot for value as on 01.04.1981 has to be obtained by you.
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Suppose the valuation of 1.4.81 is 4 Lacs.
multiply it by 8.52 you will get indexed cost of acquisition (ICOA) . 34.08 Lacs will be treated as COA. Capital Gain will be around 3 Lac. AS per the share in land divide the capital gain.
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Exemption U/s 54F is available but for that you have to invest . the sales consideration received on sale of share in the plot in a residential house. Individually the benefit can be availed.
.

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