Tax on sale of inherited property
This query is : Resolved
25 March 2013
I have inherited a 700 sq feet flat in the city of mumbai.question 1) If i sell it & invest the same amount or more in another flat will I be taxed- if yes then under which law & how much?
2) if I invest the said amount in commercial property will I be taxed - if yes then how much ?
3) within how many months am I obliged to buy new property to avoid being taxed
2) if I invest the said amount in commercial property will I be taxed - if yes then how much ?
3) within how many months am I obliged to buy new property to avoid being taxed
26 March 2013
1. You will have to invest the entire capital gain in another residential house to obtain an exemption u/s 54 of the Income Tax Act. It is assumed that the inherited flat has been in existence for more than 3 years.
2. You will have to invest in construction of new residential house or purchase of new house within 1 year prior to date of sale or 2 years after date of sale. in case you are constructing, then you have upto three years after the date of sale of old house.. in the interim you will have to maintain the capital gains amt. in an account opened for the said purpose with SBI or other nationalised banks.
3. if you invest the amount in commercial property you will be taxed at 20.6% being Long term capital gains on the indexed value of the flat
2. You will have to invest in construction of new residential house or purchase of new house within 1 year prior to date of sale or 2 years after date of sale. in case you are constructing, then you have upto three years after the date of sale of old house.. in the interim you will have to maintain the capital gains amt. in an account opened for the said purpose with SBI or other nationalised banks.
3. if you invest the amount in commercial property you will be taxed at 20.6% being Long term capital gains on the indexed value of the flat
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27 March 2013
Greetings anand, appreciate the time & response.do I guess that you are an property/IT consultant?
29 March 2013
Hi Sanjeev
You are welcome. Glad to be of help. I am a Chartered Accountant with experties in Direct Taxes.
You are welcome. Glad to be of help. I am a Chartered Accountant with experties in Direct Taxes.
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