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Ltcg tax on inherited propery

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nilang

exexutive

24 Points Posted on 01 February 2012

Dear sir/madam,

i have a query for long term capital gain tax liability for my father.

the said property was bought in name of my grandfather in 1987 for Rs.1,10,000 .

he passes away in 2001 and the property was transferred in my grandmother name.

she passed away in 2010 and the property was transferred to two sons (i.e. my father and my uncle)

the flat was sold in 2011 for Rs.14,00,000 and this was shared by both brother.

now i have two questions

1) what will be the tax liability for my father.

2) can he loan me the amount for purchase of new flat and save on LTCG tax .

any help is deeply appreciated

Replies (1)

Jatin Agrawal

130 Points Posted on 01 February 2012

since it is an inherited property, the Period of holding will be taken from the inital date of purchase being 1987 of Rs. 110k,

part 1
grandfather ---> grandmom--->Brothers

your dad assuming gets 50 % share, will 50% of 110k as hist Cost of acquisition, this can be indexed further from 1987 to 2011 by relying on the case law of Manjula J. Shah v/s. The Commissioner of Income Tax-12, INCOME TAX APPEAL NO.3378 OF 2010

the capital gain would approximately be
Sale consideration -1400000

-Coa 616785

(110k*785/140)

LTCG 783214

this LTCG will be split in 2. approx 391607

part 2
your father will have to claim exemption u/s. 54, he has to invest only the amount of LTCG,
he can give you loan...but you then he'll have to forego his exemption.

feel free to ask for any clarification.