• Valuation of inherited property through will

My mother and i owned a joint property( flat ) in new delhi.

it was purchased in 1982 for around Rs 2 lacs.

my mother died in dec 2019 leaving her share of the flat to me through will.

the present value of the flat is aroung 2 cr., so the share of property left to me by her is around 1 cr.

do i need to get it valued today by approved valuer since there is no estate duty on transfer of property.

suppose i sell the entire flat for 4 cr after 5 years., Will i be charged capital gain of 1 cr or 1.99 cr . i e
capital gain on appreciation after it was transferred to me on her death or capital gain on the whole amount since she purchased it in 1982 on the share of the property which i inherited from her ?
Asked 13 days ago in Capital Gains Tax from New Delhi, Delhi

Hi

 

There's no tax on inheritance. Hence, no need for valuation.

 

When you will be selling this property, cost of acquisition for your mother shall be considered as your cost of acquisition.

Since property was purchased before 1.4.01 , you need to get a valuation done as on 1.4.01 which shall be deemed to be cost of acquisition and indexation of this cost shall be done upto the year of sale. 

Indexation shall be done with Cost Inflation Index.

Example, property purchased for 1 lac in 2001-02 shall have an indexed cost of acquisition of 2.89 lac of sold in 2019-20. 

 

Sales consideration less Indexed cost of acquisition shall be the capital gains.

 

We may assist you with return filing, valuation and other compliances.


 

 

Further, if your mother had income during April-dec 19, you need to file her ITR as legal heir and then surrender her PAN.

Lakshita Bhandari
CA, Mumbai
4255 Answers
239 Consultations

5.0 on 5.0

Dear Ma'am,

 

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. 

 

As 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. 

 

It is advisable to get the FMV/ valuation of the property as on 01.04.2001 done from the registered valuer.

 

Government-approved valuers follow a standard process for the valuation and provide a detailed report.

 

Assumptions of any type for consideration of value shall not be entertained by the income tax department. In case of any enquiry, the department will consider the value stated in the valuation report from a registered valuer,"

                               

The capital gain will be taxed at 20.8%. You can save tax by investing the sale amount in a new house or purchasing 54EC capital gain bonds. 

               

For further discussion and clarification you can avail phone consultation on tax full.

Payal Chhajed
CA, Mumbai
3730 Answers
50 Consultations

5.0 on 5.0

Dear Sir,

 

You can get the details online.

Payal Chhajed
CA, Mumbai
3730 Answers
50 Consultations

5.0 on 5.0

The income shall be taxable in the hands of the deceased only till date of death. Any income post death shall be taxable in hands of the legal heir. 

 

If the account is not transferred till next FY, income shall be taxable to legal heir only. So there's no question of filing deceased's ITR in next year.

Lakshita Bhandari
CA, Mumbai
4255 Answers
239 Consultations

5.0 on 5.0

You may get details of valuers online or you may consult us personally.

Lakshita Bhandari
CA, Mumbai
4255 Answers
239 Consultations

5.0 on 5.0

Hello,

 

Transfer of property through will or inheritance is not taxable under the Income Tax Act. No valuation is to be done.

 

For Capital Gain calculation, Since the property was acquired before 1st April 2001, you need to valuation done for the property as on 1st April 2001. This will be considered as your Cost of Acquisition. This then will be indexed till the year of sale, to make Indexed Cost of Acquisition. Net figure of the indexed cost and sale proceeds would be your Long Term Capital Gain. Taxable at 20% plus cess.

I hope that this answer satisfies your requirements. For further understanding, you can contact us directly at badlaniassociates at Gmail or take a phone consultation.

 

Regards,

CA Hunny Badlani

Badlani & Associates

Hunny Badlani
CA, Madhya Pradesh
1587 Answers
5 Consultations

5.0 on 5.0

In case of death of an assessee, his legal representative is deemed as an assessee who shall be liable to pay any sum which the deceased assessee would have been liable to pay had he not died.

Hunny Badlani
CA, Madhya Pradesh
1587 Answers
5 Consultations

5.0 on 5.0

You can search for a certified valuer in your area.

Hunny Badlani
CA, Madhya Pradesh
1587 Answers
5 Consultations

5.0 on 5.0

Income earned from an inherited property after the date of death shall be considered as legal heir's own income. It shall be reported in legal heir's personal return.

Payal Chhajed
CA, Mumbai
3730 Answers
50 Consultations

5.0 on 5.0

Now you are the sole owner of such land so capital gain would be 4 crore less FMV of land on 01.04.2001 as you have received such land by way of will.

 

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

Thank you

Naman Maloo
CA, Jaipur
2688 Answers
24 Consultations

5.0 on 5.0

Such income and expenses would be included in your income.

You can't file next year's return in her name.

Naman Maloo
CA, Jaipur
2688 Answers
24 Consultations

5.0 on 5.0

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