Inherited vs Self-Acquired Property: What NRIs Really Need to Know

For many NRIs, property in India is inherited — sometimes from parents, grandparents, or other relatives. But the moment they want to sell, transfer, gift, or claim their share, one question becomes critical:

Is the property inherited or self-acquired?

This single distinction affects:

• Your ownership rights

• Your ability to sell

• Required documentation

• Tax treatment

• Whether anyone else can challenge your share

Here’s a simple, NRI-friendly guide that explains everything clearly.

What is Inherited Property?

Inherited property is any property you receive through succession — either:

• Through a will,

• Intestate succession (owner died without a will),

• A court order,

• Or in some cases, through a gift deed received during the owner’s lifetime.

Inherited property can come from:

• Father

• Mother

• Grandparents

• Maternal relatives

• Any legally recognized relative

It does NOT have to come only from the father’s side, unlike “ancestral/coparcenary” property.

Key features of inherited property

• Ownership fully passes to the inheritor.

• You can usually sell, gift, or transfer it without needing consent from extended family.

• Other relatives cannot claim automatic birth-rights.

• Your rights depend on the succession law (Hindu Succession Act, Indian Succession Act, etc.) and any willinvolved.

What is Self-Acquired Property?

Self-acquired property is one that a person purchases or earns on their own through:

• Salary

• Business income

• Savings

• Investments

• Any legally earned personal funds

The owner has complete control over this property.

Key features of self-acquired property

• Only the owner decides how to use it.

• They can sell, gift, or will it to anyone — even outside the family.

• Children or relatives do not have automatic rights while the owner is alive.

• After the owner’s death, the property becomes inherited property for the heirs.

Inherited vs Self-Acquired Property: Key Differences NRIs must know. 

Documents NRIs Need for Inherited Property

If you inherited property, these documents are typically needed before you can sell or transfer it:

If the owner had a will

• Original or certified copy of the will

• Death certificate

• Executor’s authority

• In some cases: probate (mandatory in Mumbai, Kolkata, Chennai)

If the owner died without a will

You may need:

• Class-I legal heir certificate

• Partition deed (if multiple heirs)

• Succession certificate (especially if bank accounts are involved)

Property documents

• Original sale deed

• Latest property tax receipts

• Encumbrance certificate

• Latest electricity/water bills

Can Other Family Members Claim a Share in Inherited Property?

This depends on:

• Whether a will exists

• Which succession law applies

• Whether the property was held jointly or individually

• Whether all heirs have already signed a release/partition deed

For example:

• If your father willed the property solely to you, others cannot normally challenge it.

• If there is no will, all legal heirs (spouse, children, mother) get a share.

Inherited property does not give automatic birth-rights to extended family — unlike ancestral/coparcenary property.

Tax Rules for NRIs on Inherited vs Self-Acquired Property

1. If you inherit property

There is:

• ❌ No inheritance tax in India

• ❌ No tax when you receive inherited property

2. When selling inherited property

You must pay capital gains tax based on:

• The previous owner’s purchase year

• Indexed cost of acquisition

For NRIs, TDS applies at the time of sale.

3. Self-acquired property sold by NRIs

Capital gains apply the same way — but documentation is much simpler since ownership is clear.

Practical NRI Scenarios (Simplified)

 Scenario 1: You inherited a house from your father

• If he left a will → You get full control

• If no will → All Class-I heirs get a share

• For sale, all heirs must sign / release their share

Scenario 2: Your mother gifted the property to you

• This becomes your individual property

• No one else can claim rights

• You can sell freely

Scenario 3: Your own self-acquired property

• Your children have no automatic rights while you are alive

• You can sell or gift it to anyone

Final Word: Why This Difference Matters for NRIs

For NRIs, understanding whether a property is inherited or self-acquired determines:

• Who legally owns it

• How easily it can be sold

• What documents are required

• Who needs to sign the sale deed

• How capital gains are calculated

• Whether disputes can arise

If you’re planning to:

• Sell

• Claim

• Transfer

• Gift

• Or bring clarity within the family

…then get clear documentation NOW.

A 30-minute consultation with a legal or tax expert can save you months of delays.