Income from sale of ancestral property

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  1. Jagannathan R

    Jagannathan R New Member

    My father owned a house property and he is no more now.We (4 in number) have shared the sale proceeds of the said house property;Is the income from the sale of ancestral property exempted from tax liability?
  2. Sumit Agarwal

    Sumit Agarwal Active Member

    Please elaborate your query. Whether your father has sold the property in his name when he was alive? Whether it was sold after his death and please also specify that who signed the sale deed?.
    One thing you must keep in mind that exemption from tax liability is not available the issue arises in whose hand taxability would be there.
  3. Jagannathan R

    Jagannathan R New Member

    Thank you for your kind reply.
    My father died in 1961 and he was not an assessee then.We, his legal heirs (1. my widow mother, 2.myself, younger brother and younger sister) executed the sale deed in Feb 2014 and shared the sale proceeds of 16,00,000 to each Rs.4,00,000(four lakhs). My father was the sole owner of the said property.I am a senior citizen.Hope these informations may be sufficient and I am ready to give you any more informations needed.
    Thank you again.
  4. Manoj Mehra

    Manoj Mehra Active Member

    No, Income from Sale of Ancestral Property is not exempted from levy of Tax.

    As the property has been held for more than 3 years, therefore it is a Long Term Capital Gains and Tax would be levied at a flat rate of 20%.

    However, if you reinvest the gains in another residential house property, you can claim capital gains exemption under section 54.

  5. V K Khanna

    V K Khanna Active Member

    Mr. Mehra I would like to know from the aforesaid case as to how the capital gain would be worked out. Will the transfer of property in the name of the legal heirs be done from the date of death of their father ie in 1961 or from the the date they executed the sale deed in Feb 2014? If former be the case, how will the fair market value of the property would be arrived at as the indexation benefits came into force on 1.4.1981.
  6. Jagannathan R

    Jagannathan R New Member

    Referring my thread, I guess that monetary benefit (gift) to an individual on sale of inherited property of HUF is not chargeable to income tax.Suggestions please. Reference:- tutorials - Tax treatment of Gifts Received by any individual or HUF - "Monetary gifts received under will/by way of Inheritance is not charged to tax"
    Last edited: May 16, 2015
  7. Manoj Mehra

    Manoj Mehra Active Member

    When a person receives an asset as a gift from ancestral/ HUF Property - it is not taxable.

    However, when this asset is sold by the person - it is chargeable to tax.

    The Cost of Acquisition in such a case would be the cost at which the property was acquired by your ancestors.

    If the property was acquired before 1-4-81, then the fair market value as on 1-4-81 would be considered.
  8. Jagannathan R

    Jagannathan R New Member

    Dear MR.Mehra,
    I need further clarification,the house property was purchased by our father in 1957 and he died in 1961.We all were living in that house till 2013 as HUF and only on Feb 2014 we soled the house and shared the sale proceeds among us and thereby we made a settlement among us.Now please let me know the applicability of income tax.Thank you.
  9. V K Khanna

    V K Khanna Active Member

    You have the option to choose -- the cost at which the property was acquired by your father or the fair market price of the property as on 1.4.1981. After applying indexation benefits till Feb 2014 on the option you chose, the capital gain, if any, would be determined and therafter you will have to pay the income tax if applicable.

    There is no way to escape from the tax liability even if there is a family settlement about the sale of the property gifted by your father.

    I would like to have the advice of Mr. Mehra.
  10. Manoj Mehra

    Manoj Mehra Active Member

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