Saving Tax on Inherited Property
Pankaj, a retired military officer, inherited a property valued at Rs 18 crore through a gift deed from his father in March 2020. To save on long-term capital gains (LTCG) tax, he recently purchased a flat for Rs 9 crore in March this year. Pankaj’s question is about the timeline for selling the inherited property to avoid LTCG tax.
Under Section 54 of the Income Tax Act, individuals can save LTCG tax from the sale of a residential house property (RHP) by purchasing a new RHP within one year before the transfer, or within two years from the date of transfer, or by constructing an RHP in India within three years from the transfer date. Since Pankaj has already bought a flat, he should aim to sell the inherited property by March 2024 to avail of this exemption. It’s important to note that the new RHP should be held for a minimum of three years; otherwise, the earlier claimed exemption may be withdrawn if it’s sold within this period.
Secure Retirement with Investments
Pankaj also wants to invest Rs 4-5 crore to secure a 3/6 monthly payout of about 7% per annum for his retirement safety. It’s advisable for him to consult an investment advisor to make an optimal investment choice aligned with his retirement objectives.
In summary, Pankaj can save LTCG tax by selling the inherited property within the specified timeline and secure his retirement by making informed investment decisions with the help of a financial advisor
