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CAPITAL GAINS ON INHERITED PROPERTY

CA SHRIYA KULKARNI (SERVICE) (109 Points)

03 November 2010

Hello

A lady (assessee) has sold a House in Manglore for Rs. 22Lacs on 14.06.2010 which she had inherited from her mother in 2005 & her mother had inherited the same from her brother.

Her brother had bought a peice of land in 1997 for Rs.1,48,000/- on which he built a bunglow / building out of which 1/3 part was given to the assesse's mother.

2005-Valued as per valuer for Rs.1040000/-

MArch 2010: Value as per valuer Rs.32,80,000/-

How do we calculate the Cost of acquisition of the house property??

Does she have to invest that amount of capital gains after calculation in a another house property???(Note this property other than residential property.)

Please help!!

Regards

Shriya

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2 Replies

Pavan Jain S (Chartered Accountant) (1575 Points)
Replied 03 November 2010

The market value as on date of inheritance is of no relevance for the purposes of computation of capital gains. The cost to the assessee shall be the cost to previous owner(s) who has incurred expenditure in acquiring the property. In your case, the cost to brother of assessee's mother shall be the cost to the assessee. Indexation has to be done considering the CII of the year of inheritance i.e. 2005 and not 1997. Further, section 54F is available for any long term capital asset if you intend to invest in any HP

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girish (self employed) (34 Points)
Replied 25 November 2010

Hello, my mother is going to sell a house in sringeri for Rs 30 lacs in december 2010, which she had inherited from her mother in 1996 after her mother died throgh will. and the said property was transfered from her husband somewhere in 1950. this property is 150 yrs old. my mother is thinking of gifting the entire amount to her children i.e me, brother and sister.

How do we calculate the Cost of acquisition of this house property? Does she have to invest that amount in another house property just to avoid tax and then gift the property to her children? I want to know how to calculate the capital gain in this regard? what will be the tax payable if the entire amount is not invested in new property? please help me regarding this topic at the earliest.