I bought a house in May 2008 for Rs 35 lakhs. The land on which the flat was built is undivided land, registered for Rs 12 lakhs and the construction agreement was for Rs 23 lakhs. The house is in the joint name of me and my wife. My wife passed away recently in March 2024. Now my 3 children are legal heirs. I have received the legal heir certificate from Tahsildar Chennai. Now the property will be sold before 15th October 2024 for Rs 74 lakhs. Please advise me how to dispose of the sale proceeds. I am a senior citizen living in a rented premises in Chennai. I cannot buy any property immediately. Is there capital gain in my case? How much tax will I have to pay or what to do if I don’t want to pay tax?
Answer by CA (Dr.) Suresh Surana
In the present case, since one of the joint owners has died, it would be prudent to consult a legal expert to evaluate the applicable Act (such as Hindu Succession Act), whether any Will has been executed to determine the share of the deceased’s spouse and 3 children, legal heir certificate etc. However, please note that on the overall computation of LTCG, it is observed that no tax will be payable, however you need to discuss this with your legal / tax advisors considering the complexity and accordingly consider the respective computation on division of share of property and sale of such property.Details
Particulars Withindexation@ 20%Without indexation @ 12.5
In case of transfer of long-term capital asset, particularly land or building, acquired by a resident individual/HUF before July 23, 2024, income tax calculated under the new provisions (12.5% without indexation benefit) exceeds the income tax calculated under the old provision (i.e., 20% with indexation benefit), such excess shall be ignored. It is important to note that the loss of Rs 18,73,723 shall not be allowed to be carried forward and the benefit of computation under the old provision is provided only for capital gains computation purposes, so that taxation as per the revised rate of 12.5% is not detrimental in case of resident individuals and HUFs who purchased property before July 23, 2024.