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NEENA (self employed)     16 February 2015

Settlement deed or gift deed


My father who has inherted property(ancestral) wants to sell it and give the amount to my brother and me. Should he transfer the property by settlement deed to us & we sell it or should he sell it as it is to avoid capital gains tax? After selling can he gift the money to us? Will that attract capital gains tax on him or us?


 2 Replies

H.M.Patnaik (Proprietor)     16 February 2015

Ur query shows u want to monetise the property and simultaneously want to avoid Capital gains tax .

In such a case, it is ur father who should dispose of the property and gift the proceeds in pro-rata basis between the siblings. If the quantum exceeds the threshold limit under the Gift Tax Act , it will attractliability under the said Act.

T. Kalaiselvan, Advocate (Advocate)     18 February 2015

Well advised by Mr. H.M. Patnaik.  If it is the ancestral property in the hands of your father, he can sell only his share in the property and not the shares of his children too.  Therefore it is advisable that first he make the family settlement and then proceed with the disposal or all of you should jointly sell the properties so that the tax liabilities may be to the barest minimum since it involves everybody's share in it.  You may take the help of an auditor in the local or tax consultant and proceed as per his further advise.

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