Sale of property

Tax queries 291 views 4 replies

RMD_SHREE

Manager

30 Points Joined November 2011

Hi Sir

My uncle in central government service and he has only two years of his left of his retirement.

My uncle has inheritance land by his grandfather, there is 17 legal heirs including wife, brother, sister, son, daughter and their children. All are given to my uncle power of attorney and NOC to sold their shares, rights of land.

My uncle developed land along with builder in JV and built a multi story building having two wings, one for each, my uncle and builder, Now uncle wants to sold all flats of his wing,

Is My uncle have to pay any kind of tax by selling flats of his inheritance property. If yes please let me know what kind of tax and how to save the tax

Thanks in anticipation

Replies (4)

Udgam Koomar

Tax Technologist

1949 Points Joined August 2011

IMHO there will be regular LTCG applicable from sale of property.

S. Shiroor

Others

1212 Points Joined July 2015

There are 5 rules for Gifted property or inherited property.

Rule 1: Date of acquisition by donor is the date of gift receiver/Inheritor

Rule 2: Cost of acquisition of donor (your uncle's grand father) is the cost of acquisition for donne ( gift recipient ) /Inheritor

Rule 3:- Indexation from the date of acquisition by the donor(ur uncles's Grand father) shall be taken.

Rule 4 : Adopt market value as cost if the asset was acquired before 01/04/1981
It has been provided in clause (i) of section 55(2)of the I T Act that in case the capital asset was acquired before 01/04/1981 , the market value as on 01/054/1981 can be adopted as cost of acquisition .

Rule 5 : Claim exemption u/s 54 or 54F or 54EC as the case may be

Each of the 17 heirs must have got a flat. They can buy another house and claim exemption u/s 54 or invest the gains part in LTCG bonds and claim exemption u/s 54EC . Under 54EC only 50lks can be exempted - rest of it will taxed.

You should approach a good CA/Tax Consultant/lawyer cum Tax consultant in ur area and take his help for filing tax returns so that the tax burden is the least.

Rashi Bajaj

752 Points Joined January 2012

Agreed with Shiroor. Income from sale of flats is definitely taxable. You will need to plan his estate with the help of a CA and a lawyer.

If all properties are in his name alone, then he may have think of some big investment to have the LTCG as tax free. Your relevant sections would be 54, 54EC(limited scope).

RAHULSMITTAL

Partner V Mittal & Co

252 Points Joined April 2012

Everything is depend on the paperwork you people have done before developing the property signed between the relatives. LTCG is applicable here. The calculation will based on paper work