Capital gain tax

When the property is held for a period of more than 24 months from the date of acquisition, the gains from the property will be termed long-term capital gains. (LTCG). This capital gain on the sale of ancestral property is taxed at 20.8% (including cess) with indexation and 12.5% without indexation.

For taxation purposes, only the above-mentioned ancestral properties are to be taken into consideration.

Any property that is inherited from ancestors by the individual does not have any tax liability at the time of inheritance, regardless of its type (movable or immovable).

However, when the inheritor sells out the inherited property, the capital gains earned on the sale of the property will be taxable.

Very well explained, opined and advised by learned senior expert despite the fact the query falls within the domain of "Tax consultants / Chartered Accountants"

Selling an ancestral house in India can trigger long-term capital gains (LTCG) tax if the property has been held for more than 24 months. Here's a breakdown of your tax liability and ways to save on LTCG:

 Tax Liability on Sale of Ancestral Property Capital Gain Calculation: Sale Price – Indexed Cost of Acquisition = LTCG Since it's ancestral, the cost of acquisition is based on the fair market value as of April 1, 2001, if inherited before that date. You can apply indexation to adjust for inflation using the Cost Inflation Index (CII). Tax Rate: LTCG is taxed at 20% with indexation benefits.

 Ways to Save LTCG Tax You can claim exemption under the following sections by reinvesting the capital gains:

 Section 54 Reinvest in a residential property in India within: 1 year before or 2 years after the sale, or Construct a house within 3 years. You must not sell the new property within 3 years. 🏢 Section 54EC Invest in specified bonds (like NHAI or REC) within 6 months of sale. Maximum investment allowed: ₹50 lakhs. Bonds have a lock-in period of 5 years. 

 Section 54F If the entire sale proceeds (not just gains) are invested in a residential house. Applicable when the sold asset is not a residential house. These exemptions can significantly reduce or eliminate your LTCG tax liability if planned properly. If you’d like, I can help you estimate your capital gains or explore reinvestment options based on your sale value.

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