Death and Taxes: What Happens to Your Crypto, Gold & Property When You Die?

While most people understand that wills and nominees are essential, fewer realise that even after death, tax rules continue to play a role. In this article, we break down what happens to your movable and immovable assets—including crypto holdings, gold, and property—once you’re gone. And, spoiler alert: it’s not always straightforward.

Inheritance vs Taxation

Let’s start with some clarity. In India, there is no inheritance tax. Unlike countries such as the US or the UK, India doesn’t levy a tax on the wealth that someone inherits. However, that doesn’t mean everything is tax-free. While receiving the asset as a legal heir is not taxable per se (thanks to the exemption under Section 56(2)(x) of the Income Tax Act 1961, for property received under a will or inheritance), future sale or income from that asset is very much taxable. So while death doesn’t trigger tax directly, it sets the stage for future tax liabilities for the people who inherit.

1. What Happens to Property?

If someone dies owning real estate, the first question is, who gets it? The answer depends on whether the person left a will (testate succession) or not (intestate succession). If the person has left a will, then the property passes to the person(s) named in the will. In some states, legal heirs must apply for probate to formalise the transfer. In the absence of a will, the applicable personal law (e.g., Hindu Succession Act, Muslim Law) determines who inherits.

Regarding the tax aspect, inheriting the property isn’t taxable. However, when the heir sells the property later, capital gains tax will apply. However, there is one catch: the cost of acquisition for calculating capital gains is not what the heir paid (since they received it for free), but the original price that the deceased incurred, plus indexation from that date. In this context, it is essential to keep relevant documents, such as original sale deeds and cost proofs, safe, as they will be important for tax years to come.

2. What Happens to Gold and Jewellery?

Gold, whether in the form of coins, bars, or jewellery, is most commonly passed down across generations in India. Again, no tax is triggered upon inheritance, but future transactions are subject to tax scrutiny. Similarly, in the case of a property, if the heir sells the property, capital gains apply.

The purchase price is again inherited from the original owner, and indexation helps reduce the tax burden for long-held assets. However, a significant issue with gold is valuation and documentation. In many families, gold is passed on informally and may not be recorded anywhere. In case of a tax scrutiny or search, unexplained jewellery could be treated as undisclosed income. Keeping a will, gift deed, or even an affidavit of inheritance can help in such a scenario.

3. The Crypto Puzzle

Crypto is the asset class that most confuses both lawyers and tax professionals. The inheritance of cryptocurrency remains a legal grey area in India. There’s no dedicated law yet governing digital asset succession, but legally speaking, crypto is considered property (as per the Income Tax treatment under Section 115BBH). It can be passed on via a will, just like gold or stocks.

The key issue is access. If the deceased didn’t share wallet keys or exchange credentials, the crypto may be lost forever. If the heir sells the inherited crypto, it’s taxed under the 30% flat rate as per Section 115BBH. Unlike property or gold, no cost deduction or indexation is allowed, even if the asset was held for years.

Checklist in case of Inheritance

If you’re inheriting assets, you need to get a Succession Certificate or probate (if no nominee or clear will), update ownership with banks, property records, KYC documents, and maintain proper documentation for the original cost of acquisition for capital gains. It is also important to report income, such as rent, dividends, or capital gains, in your ITR when the time arises. Death and Taxes: What Happens to Your Assets When You Die?

Conclusion

In India, the legal system doesn’t tax you for inheriting, but it expects you to play by the rules once you benefit from it. Whether it’s an ancestral house, a stack of sovereign gold bonds, or a cold wallet with Bitcoin, how you plan for these assets matters, for you and the ones you leave behind. Death is inevitable. However, with proper planning, unnecessary tax headaches for your family can be avoided.

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