Capital gains on property

My father-in-law owns a property. We want to sell that property and buy a new property in the name of myself and my spouse. But since my father-in-laws property will lead to capital gains tax, can he transfer his property to my spouse as gift deed so that when we sell the property and the capital gains tax arising out of it can get adjusted in the new property that we are buying in the name of myself and spouse ?

Is there a waiting period required between the gift deed and purchase of new property ?

Can we save capital gains tax this way or could you suggest a way to save capital gains ta ?

Note - The selling price of my father-in-laws property will be less than the property we are going to buy.

In respect of long term capital gains on sale of a residential house, you can claim exemption from tax if you invest the taxable long term capital gains to purchase a ready to move in house within two years after the date of sale of the house. For ready to move in house, the exemption is still available if the house was purchased before the date of sale of the house but not beyond one year from sale date.

This exemption is available only in respect of investment in one residential house in India but the income tax laws give you once in a lifetime opportunity to invest the long term capital gains on a house, in two houses to claim exemption on long term capital gains arising on one house. The one time option can be availed if the amount of long term capital gains on sale of the house does not exceed Rs 2 crore.

You can also claim exemption from payment of such long term capital gains if you construct a house within three years. Booking an under construction house is also treated as construction of a house. In case you are planning to buy a property through booking of an under construction property, please ensure that you get the possession of the property within a period of three years as specified above.

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