Capital gain on inherited asset

Tax queries 442 views 4 replies

Shomik Bhattacharyya

XYZ

31 Points Joined December 2013

Hi,

I am posting this with required details so that I can receive a structured and quality feedback. Request you to provide specific answers, please.

Details

1) My father bought a part of house @ Rs. 20000 (Twenty Thousand) in the year 1988.

2) He executed a deed of gift in Oct 2013 and transferred it onto me. The expenses incurred in this transfer is approx. Rs. 19000.

3) I am planning to sell this off by Jan 2014 for around Rs. 17 lacs.

4) I bought another house @ Rs 19.5 lacs in Feb 2012.

I need very specific answers on the above transactions

Questions

1) Will the above transactions qualify for a Long term capital gain OR Short term capital gain on my overall tax burden?

2) Considering various applicable articles of IT act what will be the capital gain tax levied on me. A rough calculation will be extremely helpful.

3) Do I absolutely need to sell the house at Stamp Duty Value? OR What happens if I sell it at a lesser value? Please provide details.

Thanks

Replies (4)

GAUTAM SHARMA

Audit Assistant

353 Points Joined May 2010

1.Period of Holding: Oct. 1998-Jan.2014(Long Term Capital Asset)

2.Comutation of Capital gain(Sec.45)

Sale Consideration: Stamp Duty Value(Sec. 50C)

Indexed Cost of Acquisition:20000*Cost inflation index of F.Y.13-14/Cost inflation index of F.Y.1998-1999(Refer Case Law of CIT Vs. Manjula J. Shah)

Long Term Capital Gain :xxxxxxxxxx

No exemption will be available regrading Cap. gain (Refer Provision of Sec.54)

3. Prima Facie u've to sell the Property at S.D.V..Howver you can challange the S.D.V.(Please Refer The Provisions of Sec. 50C).

Shomik Bhattacharyya

XYZ

31 Points Joined December 2013

HI,

Thanks for the reply. I guess the reason why no deduction will be allowed is because "I bought the property more than one financial year before". Is that right ?

If so, then I need to mention that though the property was bought during Feb 2012, yet it was acquired thru bank loan. I will pay of the bank loan after I receive the proceeds from the other property.

Let me know if the above situation changes the scenario.

Thanks

Manoj Pandit

student

139 Points Joined August 2013

1). The transfer amounts long-term capital asset transfer u/s49(1) as the assessee got property under gift which is now being transferd. The calculation of period of holding starts from purchasing date of the asset by the donor in this case. 2). Considering the sale of property @ 17lakhs, The calculation of the LTC transfer will be net sale consideration(After deducting all sales expenses) i.e. 1700k minus INDEXED COST Of ACQUISITION {i.e. (20k) * [index of the year of sale(here 2014 jan index is,presently not known)] / [161(index of the f.y. 1988-89)]} will be taxable amount of Long-term capital gain if the result is positive, liable for tax @ 20% flat rate. 3).If the sale consideration exceeds the stamp duty value then the consideration received itself is treated as sale consideration OR if the asset is sold at less than stamp duty value then, stamp duty value itself will be treated as sale consideration.u/s 50c..

Manoj Pandit

student

139 Points Joined August 2013

Yes, for the same reason the assessee can't claim exemption u/s 54.. And the answer for 2nd query is NO. The assessee if acquires house property from loan can claim deduction u/s24(b) for the interest amount paid by him on such loan. But can't claim exemption from capital gain. However, PLEASE WAIT FOR THE EXPERTS' QUALIFIED ANALYSIS..