# Tax on Inherited Property

> India has no inheritance tax, so receiving property through a will or succession isn't taxed. When the heir sells, the previous owner's cost and holding period are used — and for property the previous owner acquired before 1 April 2001, its fair market value on that date (capped at the stamp-duty value then) can be taken as cost. The gain is then taxed as long-term or short-term in the heir's hands, with Section 54 and 54EC available.

Practice: Property & Capital Gains Tax — https://www.industax.com/services/property-tax/

Because the original purchase may be decades old, a registered valuer's report for the 2001 value is often the single biggest factor in the tax bill. Where indexation is available to a resident heir, the base year used for inherited property has been contested in courts, so we apply the most defensible position for your facts.

Title steps — probate where required, succession certificate or legal-heir documents, and mutation — should be completed before sale so that the buyer's lawyer and bank accept the title.

## Key facts

| Item | Detail |
| --- | --- |
| Tax on inheritance | None |
| Cost on sale | Previous owner's cost (or FMV on 1 April 2001, capped at stamp-duty value) |
| Holding period | Includes the previous owner's period |
| Exemptions | Section 54, 54F and 54EC as applicable |

## Who needs this

- Heirs selling inherited houses, flats or land
- Siblings dividing inherited property
- Families with old property bought before 2001

## What's included

- Cost and holding-period computation
- Registered valuer coordination for 2001 value
- Exemption planning
- ITR filing

## Documents

- Will / succession documents and death certificate
- Previous owner's purchase deed
- Mutation records
- Sale deed

## Process

1. **Establish** — Title and original cost documented.
2. **Value** — FMV as on 2001 obtained where useful.
3. **Compute and file** — Gain, exemptions and ITR completed.

## FAQs

### Do I pay tax when I inherit a house?

No. Tax arises only when you sell it.

### My father bought the house in 1985. What cost do I use?

You can use its fair market value as on 1 April 2001 (capped at the stamp-duty value on that date), supported by a registered valuer's report.

### Is the gain long-term if I sell soon after inheriting?

Usually yes, because the previous owner's holding period is added to yours.

## Official sources

- Income Tax Department — capital gains exemptions: https://www.incometaxindia.gov.in/
- Income Tax e-Filing portal: https://www.incometax.gov.in/

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Canonical page: https://www.industax.com/services/property-tax/inherited-property-tax
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.