cpc

capital gain on inherited property


Hi,

I have inherited a property from my father after his demise. The property has associated disputes such as, bank loan, tenant not vacating, another person to whom father had agreed to sell and taken advance. Further, all these matters are running in various courts as disputes. There  is no possible way that I can repay back the amounts to all the parties under dispute, I am financially put to difficulty after the demise of my father. Presently, there is a buyer who has come forward to purchase this property and has agreed to settle all the disputes. But he is not paying me the fair value of the property as it stands today, he is paying approx 5% of the fair value, as the liabilites associated with this property is very huge and plus he wants to keep some good benefit for undertaking all these disputes. I cannot sell the property to him, as there are disputes and there is court order prohibiting me from SALE. I will be entering into an MOU with the buyer and providing him a Power Of Attorney to settle all disputes and thereafter do what he likes with property (sell it or keep it). The MOU and POA will be registered, with a stamp value;

Now in light of the above facts, needed guidance on the below;

a) Will the above transaction tantamount to sale and liable for taxation in my hands?

b) What will be the sale consideration as per Capital Gains tax, i) Today's fair market value ii) Stamp Value at which the documents are registered or iii) The amount I receive in my hands?

Your response to the above will be very helpful in order for me to negotiate the pricing with the buyer.

 
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Advocate

a) Will the above transaction tantamount to sale and liable for taxation in my hands?

Ans. Yes, it is treated as a capital gain.

b) What will be the sale consideration as per Capital Gains tax, i) Today's fair market value ii) Stamp Value at which the documents are registered or iii) The amount I receive in my hands?

Ans.Stamp Value at which the documents are registered

 
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ADVOCATE & TAX CONSULTANT

Mr. Vishalji, I am doubt that the above transaction is tantamount to sale. Because they are entering into only a MOU and POA for further dealings. In this case the where is the stamp duty for sale value. I think they are registering only MOU and POA. Please clarify

 
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