New Delhi, Aug. 26 -- Inheriting a property-whether it's your parents' flat in Mumbai or ancestral land in your hometown-does not create any tax liability at the time of inheritance. The Income Tax Act makes it clear: there is no tax when the property passes to you. The issue arises only when you decide to sell the inherited asset.

When you sell, the profit is treated as a capital gain. But unlike a property you bought yourself, here the law allows you to step into the shoes of the previous owner. That means both the cost of acquisition and the holding period are carried forward from the person you inherited it from.

"The cost and date of acquisition and holding period is considered from the cost and date of acquisition by the original ...