Ownership of inherited property
Guidelines on issues and concerns related to real estate, laws and taxes
I am Hindu by religion, owning movable and immovable properties, some of which are acquired by my own funds and some by inherited funds. My jewellery is also partly inherited and partly self acquired. What are my rights over such properties?
Under the provisions of the Hindu Succession Act, 1956, a person is the absolute owner of the inherited properties, whether acquired under a testamentary or a non testamentary succession. In such a view of a matter, you have all the rights on your self-acquired as well as inherited properties to deal with the same in the manner you like.
While making your will you can bequeath all such properties as per your choices and preferences.
I had purchased factory premises in an industrial co-operative society in the year 1995 for a price of Rs 57 lakh. The factory is used by my proprietary concern and is charged depreciation. Now I want to sell off the factory and want to know the tax implications and tax planning. I have no other premises in the business.
On sale of depreciated factory premises, special provisions of section 50 of Income Tax Act, 961 would be applicable. The sale proceeds minus expenditure incurred in connection with transfer would be net consideration. In your case, net consideration minus written down value of the factory will be deemed as short term capital gains.
If you purchase a new premises falling in the same block of assets before the end of the same financial year in which the factory is transferred, the price of new asset would be set off against such capital gains. Therefore, if the price of new premises is higher than such capital gains then no tax implications will arise. If the price of the new asset is lower than such deemed capital gains then the difference will be the taxable capital gains.
You may invest net consideration in purchase or construction of new residential house within the prescribed time limits and avail exemption u/s. 54F of the Income Tax Act subject to your complying with the conditions of said sections.
You may also consider investing the capital gains in capital gains bonds within a period of six months from the date of transfer of the depreciated factory to avail the exemption u/s. 54EC up to Rs. 50 lakh per financial year. The lock in period for the new residential house as well as the prescribed capital gains bonds will be 3 years
Guidelines on issues and concerns related to real estate, laws and taxes
I am Hindu by religion, owning movable and immovable properties, some of which are acquired by my own funds and some by inherited funds. My jewellery is also partly inherited and partly self acquired. What are my rights over such properties?
Under the provisions of the Hindu Succession Act, 1956, a person is the absolute owner of the inherited properties, whether acquired under a testamentary or a non testamentary succession. In such a view of a matter, you have all the rights on your self-acquired as well as inherited properties to deal with the same in the manner you like.
While making your will you can bequeath all such properties as per your choices and preferences.
I had purchased factory premises in an industrial co-operative society in the year 1995 for a price of Rs 57 lakh. The factory is used by my proprietary concern and is charged depreciation. Now I want to sell off the factory and want to know the tax implications and tax planning. I have no other premises in the business.
On sale of depreciated factory premises, special provisions of section 50 of Income Tax Act, 961 would be applicable. The sale proceeds minus expenditure incurred in connection with transfer would be net consideration. In your case, net consideration minus written down value of the factory will be deemed as short term capital gains.
If you purchase a new premises falling in the same block of assets before the end of the same financial year in which the factory is transferred, the price of new asset would be set off against such capital gains. Therefore, if the price of new premises is higher than such capital gains then no tax implications will arise. If the price of the new asset is lower than such deemed capital gains then the difference will be the taxable capital gains.
You may invest net consideration in purchase or construction of new residential house within the prescribed time limits and avail exemption u/s. 54F of the Income Tax Act subject to your complying with the conditions of said sections.
You may also consider investing the capital gains in capital gains bonds within a period of six months from the date of transfer of the depreciated factory to avail the exemption u/s. 54EC up to Rs. 50 lakh per financial year. The lock in period for the new residential house as well as the prescribed capital gains bonds will be 3 years
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