Transfer ancestral property - good idea or not..?

Tax planning 528 views 4 replies

Gaurav Kukreja

Nil

26 Points Joined November 2013

Dear Sir(s),

My Grandmom owns our current property. it is 30 years old and on house tax papers, it is around 70K, the circle rate however is 1.5 Cr.

I understand the LTCG concept the exemption to which is, if property of same amount or higher is bought, no tax needs to be paid.

The question here is - Can she sell the property with original cost of 70K in 1.5 Cr. not buy another property inseat gift the money to her children (gift deed) and her children buy property on there name from the money received in gift as part of property she sold.

Thank you in advance..!

Replies (4)

Mihir

Wealth Manager

5293 Points Joined December 2008

If she sells the property in her name, she will be liable to long term capital gain, for which she is required to reinvest or pay tax on it. Gifting the sale proceeds to her legal heirs will not change the tax payable by her.

She can prepare a gift deed wherein she may gift the property to her legal heirs, and thereafter the legal heirs may sell the property and reinvest in another property in their own names to save tax.

Note: She must make a Will at the earliest.