Tax liability on parental property

Vikash 1
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Dear Pankaj Ji,

We have a old parental property purchased by my grandfather 40 years back, now after the death of my grandfather the property was transferred to my grandmothers (Age 82 Years) name. My grandmother doesn’t have any pan card or any Income tax records.

I have two questions:

  1. Now if my grandmother sell that property & transferred the money to my name in that case what are tax liability for her and myself (I am the salaried person & want to purchase the new residential property within a years’ time)
  2. If my grandmother transfer the property in my name / or gift that to me & after that if I want to sellout the property in this case what are the tax liability on me.

Please advise

Regards Vikash

property-transfer parental-property property-sale capital-gains income-tax
2 Answers

If your grandmother sells property, she would be liable to pay income tax on capital gains arising due to sale. After paying taxes, she can transfer amount to your account as gift and there won't be any income tax payable on that for you.

if your grandmother first transfer property to your name either through gift deed or settlement deed, there won't be any tax payable on such transfer. But when you sellout this property, you would need to compute capital gains and pay income tax on same. This income tax can be saved if you buy a residential property within time period of one year before sale and two years after sale.

Pankaj Batra5212

Dear Pankaj Ji,

Thanks for your valuable advice,

If my grandmother first transfer property to my name & I will sellout the property in this case how to compute capital gains and income tax on same,

Example- Purchase price 40 years back 30,000/-(purchase by my Grandfather), current market value 21,00,000/-, Sell price 22,00,000/-(Sold by me)

I got the property by gift on 2012 from my grandmother, with these amount how much capital gain compute

Please explain & thanks again for your help,

Regards Vikash

Vikash•

Capital gains still would be computed from original date of purchase by your grandfather.

Purchase Year = A, Purchase Cost = P, Cost Inflation Index (CII) for purchase year = X
Sale Year = B, Selling price = Q, CII for sale year = Y
Indexed Purchase price = P x (Y/X) = R
Long term capital gain = Q - R = S

Here CII was only started in 1981-82, so you would have to take purchase year = 1981-82, CII for purchase year = 100 and purchase cost P should be taken as fair market value of property in April, 1981.

Pankaj Batra•

Hi, In the above case, would it be LTCG or STCG - Assuming his grandmother gifts him the property on 1 June 2012 and he sells the property on 1 July 2012. Thanks, Rikin

Rikin1
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