Capital Gain exemption on purchase of new hiuse property in

A. An individual has earned capital gain on sale of his residential house.

1. Whether he is eligible to claim deduction on capital gain in the following

situations:-

He purchases the new house in the name of his father by utilizing the above capital gain. Father is not contributing any money for such purchase.
He purchases the new house jointly in his name and name of his father by utilizing the above capital gain. Father is not contributing any money for such purchase.

2. Whether in the above case will it amount to gift to father. If yes, is the value of gift is

includible in his father income.

B. An Individual who has advanced money to builder against purchase of a Residential House and now would like to get this house registered in his mother name directly from builder. Whether

This amount gifted to mother will be includible in his mother income.
If any Rent received by his mother on the above house will be includible in the income of the individual who has gifted house.

Whether you receive exemption u/s 54/54F is tricky, as you have not purchased a house from the CG. By directly registering the house in the name of your father, your CG has been applied to making a gift and not purchasing a property and so you will have to pay LTCG on the proceeds of sale. Better idea would be to buy the property in your name and then gift it to your father as such gifts are not taxable u/s 56, since they come under the exemption category.

In case of a joint purchase, the same logic will hold good and you will get 54/54F for that part of proceeds utilised to purchase the property in your name, in short 50% of the value of the new property (assuming that the shares are equal).

Gifts to lineal ascendent or descendant are not liable to tax [Explanation (vi) to 56(2)(v)] and there is no liability to tax. Rent receipt from this property will be taxable in the mother's hands since clubbing provisions will not apply.