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Income tax on Ancestral property sold after 23 June 2024

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Dileep

Accountant

62 Points Posted on 19 October 2024

In case of sell of the Ancestral property after 23 June 2024, What will be considered as cost price ?

If on date of sale I have only 1 residential house & after sale of the Ancestral property whether 2 flats can be purchased of Rs 3 Crores each [ Total purchase price Rs 6 Crore ] using section 54F (Since maximum exemption under this Section has been limited up to Rs. 10 crores from FY 2024-2025)

Replies (2)

Quick Summary

This discussion clarifies the tax implications of selling ancestral property in the UK after 23 June 2024. It explains that the cost price can be the Fair Market Value as of 1 April 2001 if acquired by a previous owner before that date, with the holding period including the previous owner's tenure. Capital gains tax rates are outlined, and it's noted that while Section 54F exemptions are available, purchasing two separate flats might not qualify for the full exemption due to case law considering them a single unit, with a cap of £10 crore on exemptions from FY 2024-2025.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121543 Points Posted on 19 October 2024

Circle rate as on 01.04.2001.
No not eligible u/s. 54F.
There are case laws where two joint flats are considered as single residential unit.

Aashok Kumar Sharma

Finance/Compliance Consultant

75642 Points Posted on 08 November 2026

Ancestral property sold after 23 July 2024:
• Cost: if acquired by the previous owner before 1 April 2001, the FMV as on 1 April 2001 (capped at the stamp duty value then) can be taken as cost (Sec 55(2)(b), 49(1)). Holding period includes the previous owners' (long-term).
• Tax: as a resident individual (or HUF), choose the lower of 12.5% without indexation or 20% with indexation (CII 2001-02 = 100; 2024-25 = 363). For property acquired (by the previous owner) before 23 July 2024.
• If it's HUF property, the HUF is taxable. If inherited individually, each heir is taxed on their share.
• Exemptions: Sec 54 (new house) or 54EC (bonds).