i am a salaried person of 64 year old My father rented a small house in a chawl at malad west 1958 there are tenents ,he has expired in 2020 ,the above house is on a plot whos owner is pvt.ltd company. There is also story building on the same plot little bit away, it is 38 year old building & talk of redevopment is going on .what do i do about the same if from income tax point of view
Ans: Tax implications - Before the chawl goes into redevelopment:-
Rental income: If you receive rental income from the house until the redevelopment, this income will be taxed in your hands and you need to show it in your ITR and pay tax on it.
Tax implications - Once the chawl goes into redevelopment:-
Capital gains: The transfer of the old house for redevelopment will be treated as a sale, and any long-term capital gains arising from the transaction will be taxable at 20% after considering indexation. However, you may be able to claim an exemption under Section 54 of the Income Tax Act, 1961, if you purchase a new residential property within 1 year before or 2 years after the sale of the old house.
Rental income: If you rent out the new flat, you will need to declare the rental income in your tax return.
It is important to note that the above is just a general overview of the income tax implications of the redevelopment of property. It is advisable to consult a qualified tax professional to get specific advice based on your individual circumstances.
Disclaimer: The information provided in this response is for general information purposes only and should not be construed as tax advice. You should consult with a qualified chartered accountant to get specific advice on your income tax situation.
