Ancestry immovable property tax on selling

I have assumed FMV of land as 2.5 lakh for now and so indexed cost of acquisition would come to 7.8 lakh but i would suggest you to get a valuation report as you received the land as gift and it was purchased before 01.04.2001.

If the circle rate of land is 33 lakh then capital gain will be calculated on 33 lakh since the difference is more than 5%.

So the capital gain would be around 25 lakh and tax on same would be around 5 lakh +4% cess.

There is no option to save tax by investing in mutual funds.

If the property is just a land then you have 2 options either to invest in bonds or invest in house property.

If you need detailed assistance you can get a phone consultation.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Hello Sir

For computing the capital gain of the property i need the purchase price of the property at which your father had purchased it and also the year in which thr property was purchased by your father. 

Thanks and Regards

Divya Chugh

Get a valuation report.

Hello Sir,

As per the provisions of income tax act we require the purchase price of the previous owner for calculating the capital gain. 

Thanks 

Divya Chugh 

Dear Sir,

Hope you are doing well !!

Where a capital asset has been inherited, the period of holding of the capital asset by the previous owner also needs to be taken into consideration in computing the number of years of holding. 

-If the date of acquisition falls prior to 1 April 2001, you have a choice to consider the Fair Market Value (FMV) of the property as on 1 April 2001 as your acquisition cost. 

So, firstly you need to get the valuation report of property as on 01.04.2001.

To calculate the long-term capital gains tax payable, the following formula is to be used:

Long-term capital gain = full value of consideration received or accruing – (indexed cost of acquisition + indexed cost of improvement + cost of transfer), where:

Indexed cost of acquisition = cost of acquisition x cost inflation index of the year of transfer/cost inflation index of the year of acquisition.

Indexed cost of improvement = cost of improvement x cost inflation index of the year of transfer/cost inflation index of the year of improvement.

There are numerous slabs and sections under which you can save on tax if you reinvest your long-term capital gains.

You can claim an exemption from LTCG, under section 54 of the income-tax Act if the LTCG is reinvested in a new residential property located in India within the specified time frames. Where the new property is purchased, the gain is required to be reinvested either within 1 year prior to sale date or 2 years after the sale date. Where the new property is constructed, the time period prescribed for the reinvestment is within 3 years from the date of sale of the original asset.

Alternatively and/or additionally, you can invest the capital gains of up to Rs 50 lakhs in bonds of NHAI or REC, within six months of its accrual and get the exemption u/s 54EC

Please note that in order to claim exemption, you need to invest the capital gain amount if a house property is sold. However, in case of sale of a land, entire sales consideration needs to be invested.

Please take a phone consultation for detail discussion. 

Hello Sir,

Thank you very much for rating. 

But i think you must have a look to the income tax provision which clearly my point.

Here is the link 

https://www.incometaxindia.gov.in/_layouts/15/dit/mobile/viewer.aspx?path=https://www.incometaxindia.gov.in/acts/income-tax%20act,%201961/2019/[deleted].htm&k

Thank you once again.

Regards 

Divya Chugh 

We may assist you in entire procedure.

Also, we may help you in getting valuation report.

Hello,

Since the property is ancestral, you need to get a valuation report for the property as of 1st April 2001. This will be considered your cost of acquisition as on 2001, which will be indexed up to F.Y. 2019-20 to get the indexed cost of acquisition.

This indexed cost will be reduced from the sale consideration of Rs. 30.50 Lakhs to get the Long Term Capital Gain which will be taxable at flat 20% plus cess.

I hope that this answer satisfies your requirements.

Regards,

CA Hunny Badlani

For exemption from tax on this capital gain, you can invest the capital gain or sale proceeds in house property to claim exemption u/s. 54 or 54F respectively.

Hi

For capital gain calculations, FMV of the property as on 1.4.01 shall have to be determined first. 

Supposing it comes out to be 3 lacs, then your capital gains will be around 22 lacs. 

(I assume the stamp duty value of the property as on date of sale is not more than 30.5 lacs)

For capital gain exemption, you may either invest in a residential house property under section 54 or in section 54EC eligible bonds.