Selling one property and buying new one in other state
Sudeep Naik
(Querist) 19 April 2012
This query is : Resolved
Hi,
We want to sell our forefather's property (House) which is in the name of my grandfather who is passed away sometime back. That propert was purchases some 100 years back.
Now if we want to sell that property and buy a new one in different city with the amout received, then what would be our income tax liability.
Thanks
A V Vishal
(Expert) 19 April 2012
When did you inherit the property, if it is more than 3 years than you may be able to benefit on the LTCG however if the inheritance is less than 3 yrs you may end up paying tax. Further, your query has many missing details.
Sudeep Naik
(Querist) 19 April 2012
Thanks Vishal,
That property was transferred to my Grand Father's name around 40 years back and he passed away around 30 yrs back. Later after his death only the name transfer in municipality(namantaran) is done in my grand mother's name And no paper work is done after that.
So as of now Registration document is in my grand father's name and municipality document in my grand mother's name.
She also passed away 1.5 yrs back and now we want to sell the property and buy a seperate house in other city.
Please let me know the income tax liability.
Also if you need more details, please let me know.
Also if possible please let me know the procedure for selling the property.
A V Vishal
(Expert) 19 April 2012
Sudeep: The property in question was devolved only 1.5 yrs back, hence the sale will attract short term gains and liable to tax @ 30% viz. the highest slab, moreover there are no exemptions for investing in another property unlike long term gains where the assessee can save tax by investing in another property/tax saving bonds etc. Hence you will be liable to the total gain on sale of the property.
Raj Kumar Makkad
(Expert) 19 April 2012
You have no provided the details of the legal heirs of your grand-father who expired about 30 years ago without which no definite reply can be given, however, the reply of Vishal is incorrect because he has ignored the major fact that merely entry in the municipal record do not make the owner of the entire property to the grandmother of the querist. The property was duly owned and possessed by all legal heirs of the deceased in their respective shares.
Even if I presume that your grandfather has only one son means your father then your grand-father left his legal heirs. One his widow and another your father. The property shall be divided in 2 equal shares at that time.
You have no mentioned about the status of your father. I presume he is alive as on day so in totality if my presumption is true then only 50% impact shall be over you as per advice of Vishal.
You have not mentioned who transferred the property in the name of your grand-father 40 years ago and what was mode of transfer. It information is very important to know to correctly reply your query. If the property was ancestral in the hands of your grand-father then you all brothers and sisters are also co-sharers therein and in that event the liability of Capital gain further reduces.
Only the share of your grand-mother may fetch LTCG.
C. P. CHUGH
(Expert) 19 April 2012
I agree with Makkar ji, Number of courts has held that while computing capital gains in case of properties acquired by other means as specified in section 49 the period of holding of previous owner(s) is also to be considered, and in this case the property is stated to be originally acquired a hundred year back. Finding a lenial descendants and heirarchy in such case could be a difficuit task, but it would land in the present heir's hand as Huf property and would be taxed as long term capital asset. Cost of acquisition is to be considered as the cost as on 01-04-1981 and then cost of indexation to be worked out as per law. Sales Consideration-indexed cost of acquisition is LTCG which is either to be reinvested in acqusition of new asset or invested in tax free infrastucture bonds u/s 54EC, subject to certian conditions, or tax to be paid.
Sudeep Naik
(Querist) 20 April 2012
Thank you Everybody for your useful replies.
My grand parants has 3 legal heirs and all are alive as of date. It was allotted to my grand father as per court's order 40 years back.
I know that the share would be devided in 3 but would it be liable of taxation on whole or only the gain (selling price - cost of indexation after 01-04-1981) as mentioned by Mr Chugh?
Lets say the property is sold in Rs X, and everybody gets Rs X/3. Now if the cost of indexation comes to be Rs Y (calculated after 01-04-1981) which is lower than X. then tax would be computed on "X-Y" or only "X"?
Shonee Kapoor
(Expert) 20 April 2012
X-Y
Regards,
Shonee Kapoor
harassed.by.498a@gmail.com
