Selling inherited property: Who will pay tax?
When an inherited property is sold, tax liabilities are typically divided among the legal heirs based on their individual shares. Regardless of whether the sale proceeds are credited to one heir's account, each heir remains responsible for paying capital-gains tax proportional to their share. However, discrepancies can arise if the ownership and sale documentation do not align with the tax records.
To avoid such issues, heirs must ensure that their shares, sale deeds, banking records, TDS reports, and income-tax returns match.
The original cost, improvement expenses, and any applicable provisions of the Income-tax Act are used to determine the capital gains for an inherited property. Each heir calculates their gains based on their share of the sale consideration, acquisition and improvement costs, and transfer expenses. The previous owner's holding period is also considered, and for properties bought before April 1, 2001, the fair market value as of that date may be used as the cost of acquisition.
If the sale price is lower than the stamp duty value, the stamp duty value can be considered the purchase price, subject to certain safeguards.
Written by urgent.news from The Economic Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
