Capital Gains on Residential Property?

our family has a residential property in the name of our grand mother purchased and constructed in 1965. The grand mother passed away in 1970’s. my father has three brothers also. The property has now been decided to be purchased by the eldest of four brothers and he will pay 25% of a valuation decided for the property to other three brothers (including our father).
Pls advice whether this shall be termed a sale of residential property (25%) in the hands of our father ? what would be the capital gains implications ? I have a brother also and father wishes to buy two residential flats one for both of us. Pls advice whether the capital gains arising on the ancestral property, can be claimed under exemption through the purchase of BOTH thses residential flats. Whether any amount other than the cost of these flats, the registration costs for thses can be considered while claiming exemption ?

So, the questions remain as under:
1.whether the sale of ancestral property as aforesaid shall be termed a sale of residential property (25%) in the hands of our father ?
2.What would be the capital gains implications on this ?
3.What should be treated as the cost of acquisition of this ancestral property constructed in 1965?
4.Whether my father can claim tax exemption on thses capital gains ?
5.Whether both the flats being purchased can be considered for this exemption ?
6.What all costs can be considered as the costs of the new flats being purchased ?
7.Any other mode of tax planning and management which you may feel good.

Capital Gains on Residential Property?
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One Reply to “Capital Gains on Residential Property?”

  1. 1. Your assumptions are wrong. It is not ancestral property. It is inherited property, which becomes self aquired after inheritance. The legal heir becomes the sole owner.

    2. The value of the property as on 01.04.1981 is purchase price. Present market value is sale price. CGs will be calculated on this basis. Your father will pay 25% CG.

    3. answered.

    4. Father can claim tax exemption on CG u/s 54.

    5. He has to buy 1 residential house in his name to claim exemption u/s 54.

    6. Computation of Long-term Capital Gain:
    1. Take the full value of consideration (full sale price without any deductions),
    2. Deduct
    •Expenses incurred for the transfer,
    •Indexed cost of acquisition, and
    •Indexed cost of improvement.
    3. Deduct exemptions under section 54, if any.

    7. Stamp duty & registration fee gets tax benefit us 80C.


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