Capital Gains on Inheritance

Dear Sir,

Hope you are doing well !!

Section 49(1) Of Income Tax Act says that “Where the capital asset became the property of the assessee by succession, inheritance etc . then the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be.

Also, you can index the cost of acquisition according to the CII of the property for FY 2000-2001.

The CII is computed using 2000-01 as the base year. This implies that purchases prior to the year 2000 will use 100 as the CII value for calculating the indexed cost.

Here is how the indexation is done.

Indexed Cost of acquisition for the purpose of capital gains = Cost of acquisition of previous owner x [Cost inflation index (CII) of the year of transfer] ÷ [Cost of inflation Index (CII) of the year in which purchased by previous owner]

Hi

Yes indexation benefit can be claimed.

As per sec 49 of IT act,Cost of acquisition will be cost to the previous owner. since it was purchased before 2001.you can get FMV of property as on 1.04.2001 and consider it as cost of acquisition.

Hope it helps

No relevance in case of inheritance.

Hi

No

it will be LTCG only. Holding period is considered from date it was hold by previous owner.

Hope it helps

Dear Sir,

Yes, you can avail indexation benefit for the computation on Long terms capital gains.

The period of holding will be considered from the date of purchase by your father. The cost at which your father bought the house shall be considered as cost of acquisition.

However, the property was acquired before [deleted], you need to get the fair market value as on [deleted].

The LTCG shall be computed as the difference between net sale proceeds and indexation cost of acquisition. For indexation, the cost of acquisition should be adjusted by applying the cost inflation index (CII) of FY 2000-2001.

The year of inheritance has no importance in the calculation of long-term capital gains. 

Hi,

- In case property is inherited through inheritance then cost of acquisition and holding period is calculated in terms of previous owner only. Obtain valuation report as on 01.04.2001 and indexed the COA for the purpose of computation of capital gain. 

Thanks

Since you got the land by inheritance your date of acquisition would be deemed as 2000 and so you need to find FMV of land for 2001-2002 and index it from there and find long term capital gain. Since you have received it by inheritance your date of acquisition i.e. 2018 is irrelevant.

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Thank you

When a property is received on inheritance, it is not taxable for the receiver. When the inheritor, sells it, capital gains on the sale are taxable for the inheritor. The cost of acquisition and indexation shall be done as follows.

Cost of the property – The property did not cost anything to the inheritor, but for calculation of capital gain the cost to the previous owner is considered as the cost of acquisition of the Property.

  Since your father purchased in 2000, you can also adopt Fair value as on 2001 for cost.

Indexation of cost – Additionally, the year of acquisition of the previous owner ie 2000 is considered for the purpose of indexation of the cost of acquisition.

The holding period of your father is counted as your holding period, hence it’s a long term capital gains.