Legal advice, documentation, taxation & investment planning of property sale proceeds.

POSTED BY monty salvo ON January 19, 2012 4:15 pm COMMENTS (3)

My friend wants to sell house for Rs. 5 Cr.s which his father had made in 1979 (with completion certificate). His father died without making any will and family consists of his wife,two daughters, mother and younger brother. Now what do you say about the situation when family members want to sell this house made by his father.
(1) how the proceeds will be distributed?
(2)All legal formalities and documents required ?
(3)Income tax liabilities and how to pay least income tax or no income tax?
(4)How proceeds to be invested by all?
(5) Any other suggestions.

3 replies on this article “Legal advice, documentation, taxation & investment planning of property sale proceeds.”

  1. Dear Monty salvo, As the person in question was a hindu, all the linear heirs are eligible for a share in the property. Including the wife of the elder son. D’ters are eligible for share but if they are married, their husbands are not allowed.

    So the share ‘ll be equal among the following persons –

    Elder Son
    Elder Son’s wife
    D’ter 1
    D’ter 2
    Younger Son

    For the above info, please do consult a tax consultant or tax adviser having experience of handling of property related issues also.

    Regarding the other related queries, here are the answers.

    1. Keep intact the original purchase/construction cost related papers ready & at the same time, arrange a valuation report from a Govt. approved valuer for the value of the house in the financial year 1981-82. This valuation report ‘ll be the basis of LTCG calculation.

    2. Question of Tax liability can be answered only after getting the details of property valuation for FY 1981-82.

    3. Investing the sell proceeds ‘ll be a personal choice for each of the individual as it’s now their own capital.



  2. Dear Monty, Please do not as the holding period of the property is more than 3Y, the gains from sell of property ‘ll be classified as Long Term Capital Gains. Accordingly the onus of taxation for this capital gain ‘ll be on all the legal heirs of the deceased.

    As the person had died intestate (with out will), the distribution of amount ‘ll be governed by the religion of the deceased person. All the persons’s share in the property or should I say sell amount, ‘ll be governed by the above.

    First of all, please calculate the indexed capital gains. The amount of money distributed to each of the person ‘ll decide the gains liability in the same ratio to each of the person.



    1. monty salvo says:

      he is punjabi hindu living in NCR/delhi.

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