Sale of parent's property on demise ?

Querist : Anonymous (Querist) 29 January 2011 This query is : Resolved
My father had two flats in Mumbai and he died intestate without a will. We are now 5 legal heirs and want to sale the flats so that each gets his 20% share.

What will be tax implication on such sale and what happens if I invest my share in buying a flat and borrow from bank for the shortfall amount ? Awaiting your expert opinion.

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A V Vishal (Expert) 29 January 2011
Your query has some missing links, kindly clarify the date of your father purchasing the property to ascertain whether the assets qualify as LTCA or STCA, the consideration paid and cost of improvement incurred, the date of his death and the price for which you intend selling the flats for proper advise. The reply to the second part will be in relation to the above.

Querist : Anonymous (Querist) 29 January 2011
Thanks for reponse.

Father got these two flats in lieu of two tenancy flats in the year 1970 and he died in January 1996. Now the legal heir have agreed to sell the flats under Consent Terms Order passed by the court on my application and have agreed to share the sale amount equally as earlier the two legal heirs who are occupying the flats were not willing to give up the flats. Regards.

soumitra basu (Expert) 16 April 2011
This is will be a long term capital gain. Fair market value of the flat as on 01.04.1981 shall be the cost of the flat. After that indexation of the cost is possible. Sales Price as reduced by indexcost of acquisition/imporovement shall be treated as long term capital gain. If you can not invest either in residencial property or in capital gains bond in that case 20% gain tax has to be paid.

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