My mother inherited some farmland property, and at 90 years age, she sold it off. She kept with herself a part of the sale amount, and the remaining amount she equally distributed ('gifted' ?) to we four brothers.
Now, from each of our shares, we brothers gave different amounts (ranging from 30 L to 60 L) to our sons for purchase of houses, etc.
Now what is the tax liability to us four brothers, and to our sons ?Was there any capital gain in the above property transaction.
There won't be any tax liability on you or your son but it will be on your mother.
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Thank you
Hello,
Tax liability on Capital Gain would arise for your mother(seller of the property). No tax would be payable by the brothers or their sons.
I hope that this answer satisfies your requirements.
Regards,
CA Hunny Badlani
Hi,
There is no tax liability to you and your sons. However, you mother would be liable to capital gain taxes on accout of sale of the property.
She can save some taxed by investing the money in buying residential house in her own name.
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.
Hi, Capital Gain Liability is on the Owner of the Property. Since your Mother was the Owner at the time of Sale, she is liable to pay Income Tax on Capital Gains
