What was the grandfather concept used in capital gain?

Question

Accepted Answer

Grandfather concept in capital gain refers to the original cost of an asset inherited from a deceased relative.

Grandfather concept is used to determine the cost of an asset inherited from a deceased relative for the purpose of calculating capital gains tax.
The cost of the asset is considered to be the original cost paid by the deceased relative, rather than the current market value.
This can result in significant tax savings for the inheritor if the asset has appreciated in value since the original purchase.
For example, if an individual inherits a property from their grandfather who purchased it for $50,000 and it is now worth $500,000, the inheritor would only be taxed on the capital gain of $450,000 rather than the full value of the property.

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