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Selling property acquired through legal hiership certif

Bhavik (Accountant) (99 Points)

06 January 2014

Hello,

My mother whose is a senior citizen has acquired her aunty's house thru succesion / legal hiership certificate and wants to sell the same. My query is how will the proceeds be taxed? will the entire proceeds be taxed at normal income tax slabs / short term / long term? My mother is not filing income tax returns since 15 years now.

Please note that the legal hiership certificate is issued in the 1st week of January 2014.

Can She Invest the proceeds in Long Term Capital Bonds?

Thanks.

Regards.

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4 Replies

Mihir (Wealth Manager) (5293 Points)
Replied 06 January 2014

The cost of acquisition of the property for your mother shall be the cost of acquisition for the previous owner (aunt). Long term capital gain earned after computation can be invested in another property within 2 years or in bonds within 6 months. She will have to file her IT returns before due date to show this transaction.

Bhavik (Accountant) (99 Points)
Replied 07 January 2014

Originally posted by : Mihir
	The cost of acquisition of the property for your mother shall be the cost of acquisition for the previous owner (aunt). Long term capital gain earned after computation can be invested in another property within 2 years or in bonds within 6 months. She will have to file her IT returns before due date to show this transaction.

Thank you very much for your advice, but a CA has a different opinion, I was told that selling an INHERITED property does not attract any tax whatsoever and that the proceeds are completely free and can be deposited in bank FD's or other alternate investment options. Now, that I have 2 contrary views I am completely confused.

Mihir (Wealth Manager) (5293 Points)
Replied 07 January 2014

After the demise of aunt, the property was transferred to your mother through succession certificate. This transfer will not be taxed in any way. But when your mother, as the owner of this property, will sell this same property, she will be taxed. I don't know what that CA has understood. Wait for more replies

Bhavik (Accountant) (99 Points)
Replied 07 January 2014

Originally posted by : Mihir
	After the demise of aunt, the property was transferred to your mother through succession certificate. This transfer will not be taxed in any way. But when your mother, as the owner of this property, will sell this same property, she will be taxed. I don't know what that CA has understood. Wait for more replies