Know the tax implications for an inherited property: Tax Guide
Any asset that is given to the trustee after the owner’s passing, whether by will or in line with the laws of inheritance, is regarded as an inherited asset. Up until 1985, the executor of the estate was responsible for paying any inheritance taxes; this “property tax” was abolished in 1985. There aren’t any tax repercussions associated with acquiring riches right now. Two restrictions, nevertheless, could have an impact on taxes. Check out when and how it applies.
If the property is rented out at the time of inheritance, the insolvency practitioner is subject to property tax on the rental income that is accumulating at that time. If and when you decide to sell your inherited property, capital gains tax will be due on the sale. Depending on how long you held the property before selling, the capital gains tax will either be LTCG or STCG.
The earnings are added to the seller’s overall income if the holding period is less than two years, and they are taxed following the income table for the relevant financial year. Additionally, the indexed returns are subject to an LTCG of 20% + 3 et seq. if the holding term is longer than 2 years. The guidelines for figuring out the holding term of an acquired property and an inherited property, however, differ somewhat. Between the purchase date and the sale date is the ownership term for the purchased property. The purchase date for an inherited property, on the other hand, is the day it was bought from the property’s original owner, not the day it was inherited.
You can take advantage of the LTCG tax exemption similarly to other real estate. You must reinvest capital gains on a residential property within the last year or two years after the property’s sale. Start constructing a new home: You may also reinvest the money to help with the cost of a new home’s development. Put money into capital gains Bonds: You are eligible for exemptions if you invest up to Rs 50,000 in bonds from companies like REC (Rural Electrification Corporation) or NHAI (National Highway Authority of India).
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.
