Hi My Question is 1. My Grandfather bought property in 1954, built a home on it. 2. He willed this property to my cousin, and died in 2004, so my cousin inherited this property. 3. My cousin gifted me this property in Nov 2016. i paid stamp duty as it was not blood relation (valuation was 24 lakhs). 4. I sold this property in 2017 for 24 lakhs. My question is a. As it was gifted to me and i paid stamp duty do i need to pay tax on it. b. I sold property on same rate on which i gift deed was made, i.e. 24 lakhs. Will i incur any capital gains. will it be STCG or LTCG
Hi,
Yes, you are liable to pay capital gain. However, most probably? in your case it will be a capital loss so you may not required to pay any tax.
You need to get the property valued as on 1.4.2001 and index it with current indexation. Finally reduce the sale consideration by the index value and that will be your capital gain/ loss.
You need to file return of income.
Please feel free to call/ revert in case you need more clarity.
Thanks Abhishek You mean to say that long term capital will be applied, where cost of acquisition would be rate at property was purchased by my grandfather and will be indexed? Also do i need to pay tax on gift deed and if it will on stamp duty amount or over all amount, as mentioned earlier it was not blood relation
Also as i have purchased property why i am liable to pay tax, if its long term capital gain
For calculation of capital gain tax, the Fair market value as on 01.04.2001 would be required to calculate the indexed cost of acquistion. It would be a Long Term Capital Gain.
The gift so received shall also be taxable.
You probably have chosen a wrong route for transfer of such property, increasing the tax burden.
Hello,
Yes, you will be required to pay LTCG on the Capital gains that you have made out of this transaction. Since you have mentioned that you have purchased a new property, could you please provide the following:
1. Date of Sale
2. Date of Purchase of new property.
3. Value at which new property is purchased.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP
Hi,
There will be long term capital gain of the sale of the property. Your period of holding will be from the time your grandfather constructed it till the time you have sold the property. The purchase price will be the government valuation of the property as on 1 April 2001. This will be indexed and will be reduced from the sale consideration received by you. The resultant figure will be your long term capital gain.
As the property was transferred by way of a will and then a gift deed, they are not considered as "transfer" as per section 47(iii) of the Income-tax Act, 1961 and your period of holding is deemed to be from the time your grandfather bought the land and built the house.
There will not be any gift tax on the gift deed.
Trust this clarifies.
Regards,
Keerthiga Padmanabhan
M.Com., CA, LL.B
