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Ltcg calculation on sale of ancestral property

Udgam Koomar (Tax Technologist) (1949 Points)

27 July 2013

Hello, I sold a house in Ballabgarh Haryana that was ancestral, it was older than 1985 and there is no know value of purchase amount, the municipality says there is no record of fair market value pre 1985, so what should i consider as Purchase price of this house? I sold it at 60L in 2012 so need to calculate LTCG. Please guide.

Also I need to park the LTCG money in Capital Gain Account Scheme (CGAS) or REC so once invested, can I claim exemption under section 54? Also do i get any tax benifit of selling ancentral property? like any exemptions. Also the property got transfered to my name in 1995 so will the index value of 1995 be considered or 1981?

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4 Replies

Mihir (Wealth Manager) (5293 Points)
Replied 27 July 2013

Since it is an ancestral property and was transfered to your name via inheritance, the cost of acquisition shall be the cost to the previous owner. If the property was purchased prior to 1981, then market value will be for the year 1981. The indexation shall be on 1981 if it was purchased before 1981 or else the year in which it was actually purchased.

The sale proceeds will be deposted in captal gain account, and later you can invest in infra bonds or purchase another property. You will get exemption u/s 54.

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Udgam Koomar (Tax Technologist) (1949 Points)
Replied 28 July 2013

Strange, I went to Ballabgarh, the municipal and other people who knows says there is no land prices available before 1981, and i could not find a valuer, what price should I take? Can I just file my returns right now as date is nearing and later see if I get any data and then revise if required or I can just decide my market rate and relax.

CA Jaspreet Singh Sidana (Chartered Accountant) (45 Points)
Replied 29 July 2013

UTTAM sir, if u r not able to get value at the time of purchase,u can date value back at 1981 by reverse indexin..as in u shall take the market price of the house as on the date of sale..divide it by the cost inflation index and multiply by 100...u shall get the fair idea of the value as at 31-3-1981..i hope this will help u!!

tjr (Retired) (148 Points)
Replied 18 August 2013

Originally posted by : jaspreet

Dear Jaspreet,

Would appreciate a reply & thanks in advance.
Is is sufficient take the market price of the house as on the date of sale..divide it by the cost inflation index and multiply by 100...to get fair idea of the value as on 31-3-1981 OR do I need to go to an Indian Government Approved Valuer to get the property cost as of 1910.

Regards

Tjr