• Inherited property sale - NRI

Hi,
I have a property which was inherited and planning to sell that. What would be the tax rate?
Asked 3 years ago in Capital Gains Tax

- There are two critical aspects in your case, one is inheritance and other is your residential status i.e. NRI. 

- In case of inheritance, period of holding and cost of acquisition (COA) in the hands of previous owner is considered. If the property is purchased before 01.04.2001 then compare the COA or FMV of the property as on 01.04.2001 and consider the cost whichever is higher. Apply Indexation to COA till the year of transfer of the property. The resultant value will be Indexed COA. Indexation is applied to give the benefit of inflation between the year of purchase and year of sale. Property sold after 2+ years is considered as long term capital asset otherwise short term. To get the FMV, get the valuation report from the registered valuer.

- In case of NRI, first of all disclose the NRI status the buyer. In case of NRI, TDS rate is 20%+surcharge (depending on sale consideration amount)+4% cess. TDS is deducted on the sale consideration value. To avoid higher deduction of tax, you can apply for NIL or lower tax deduction certificate. Obtain the proceeds in NRO account and then transfer to your foreign account after filing of Form 15CA.

 

For detailed discussion, please contact personally.

Vivek Kumar Arora
CA, Delhi
4825 Answers
1030 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

You need to pay 20% (plus surcharge & cess) tax on long term capital gain amount.  

 

Amount of capital gain would depend upon sale price, sale date, purchase price and purchase date by your ancestors. Please share the details with us for exact capital gain calculation.

 

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 to decide whether its long term or short term.

 

-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.

 

 

We may assist you in capital gain tax calculation and entire procedure.

 

It is advisable to take a phone consultation for detailed discussion. 

 

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

You have to transfer this amount in NRE account first and then you can transfer it to USA bank account.

 

You have to fill up and submit Form 15CA (online application form) and Form 15CB (Chartered Accountant Application) to the bank branch to transfer money from India to a foreign country.

 

We may assist you in entire procedure.

 

 

 

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

Since it's an inherited property I am assuming it's a long term property i.e. held for more than 2 years and hence tax rate would be 20%.

 

Hope you find the information helpful if you do please rate it 5 and for further discussion you can book phone consultation.

Thank you

Naman Maloo
CA, Jaipur
4265 Answers
96 Consultations

5.0 on 5.0

H,

 

The capital gain tax rate is 20% in case of long term capital gain.

 

Capital gain is calculated by reducing indexed cost of acquisition are indexed cost of fair market value /stamp duty value from the sale proceeds. Index cost is nothing but and inflation adjusted cost. Capital gain tax at the rate of 20% would be calculated on the capital gain amount calculated above. You can also get exemption from capital gain tax if you plan to reinvest that money in some eligible bonds /property on India for next three years.

 

If you dont want to avail exemption, you can transfer the money into your overseas account by filing Form 15 CA. Se banks ask for 15CB as well but thats ok, you can get these things easily.

 

Another important thing which you need to keep in mind is tha sincet you are an NRI the buyer would deduct tax (TDS/ withholding tax) at the rate of 20% and deposit it with the government. If you don't want the buyer to deduct the tax, you can get the lower/Nil TDS certificate from the income tax department.

 

We can assist you end to end procedures.

Lakshita Bhandari
CA, Mumbai
5687 Answers
909 Consultations

5.0 on 5.0

The capital gain will be calculated considering the cost to the previous owner. If previous owner acquired it before 2001 valuation as on 1st April 2001 will have to be done. Money transfer to US will need Form 15CA and 15CB from Chartered Accountant.

Ruchi Goel Anchal
CA, Gurgaon
525 Answers
16 Consultations

5.0 on 5.0

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