Sale of house property

Some 35 years ago, my father in law , alongwith his 3 collegues, purchases a plot in Aurangabad and constrcut 4 residential flats for each on that plot. That time everyone contribute Rs. 40000 each.Atter he passed away, 10 years ago, without making a will, ownership of property is now in name of my mother-in-law and 4 sisters. Now other 3 owners want to develop that plot and as we are not interested,we want to sell off our share at a consideration of 60 lakhs.

 

Now what will the tax liability ? Is there any way to reduce it to zero ? or what will be the mimimum tax in this case ? Did indexation applies in this case also ? If we bough long term capital gain bonds, after holding them for 3 years we can redeem them and save entire tax ?

please help me ! Thank You !

Replies (1)

Your Share of Proceeds are to be re-invested in Residental House ONLY for exemption.

It is to be invested within a period of one year or before return filling date whichever is earlier.

You can buy a new / old or even construct a new RESIDENTAL HOUSE.

In case of Construction the money is to be deposited as per capital gain scheme in  bank account.

Period allowed for construction 3 years from the date of sale

In case you decide to re-invest below the value of proceed received i.e., 60L taxation are applicable on proportionate basis.

Number Game,

No of Shares = 5

Each = 8000 (40,000/5)

Cost Inflation Index = Currently Approx (6 times)

Your Cost = 48,000

Gain = Sale consideration - Cost =60,00,000 - 48,000

Taxable Gain =59,52,000

Tax @ 20.60% = 12,26,200

End Cash Flow = 59,52,000-12,26,200 = 47,25,800/-

Tax only if you decide to utilize the Gain

Recomendation

If your confident that you Investment in Property is your option and you are certain about the future then invest in properties.

Capital Gain Bonds at your choice = Rate of Interest less then 6%

Three years with Interest you will get back 60L+10L = 70L (10L isTaxable)

Pay the Tax and look for other avenues. 

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