Long term capital gain on selling property

It can be said that your father is buying a share in the house property, which shall also be allowed for the purpose of claiming exemption to the extent of 1 Cr.Why showing it as 1/3 rd? make it in proportion of amount invested.

There's no issue in your wife also being named as applicant. Many people do make female as owner because there are lower rates to be paid while registeration but that per se doesn't make that person the owner, how the payment was made and who made the payment will be considered both in general law and for income tax purposes

But the joint holding must document the share of each person in the property.

Although there are few cases in which it was held that its not necessary that poperty should be in name of the assessee only but since this case is of joint holding its apt to use to avoid un-necessary problems.Though ultimate effect would be the same (he will be entitled only to his share of sum)

In your case as it is Residential House property, your father need to invest just capital gain amount but not entire sale consideration to claim Capital gain exemption u/s.54. Contention of Mr.Z is correct. No where in Act specifies whether new property purchased should be in the name of Investor and it is family arrangement to allocate share of new property acquired among family members. It is immaterial even though your father paid 1Cr. to acquire property but only get 1/3 share in such property. But if your father is co-owner then no defend against this arrangement is possible. So your father can claim capital gain exemption.

Thanks everyone. I have one follow up query:

Once we get the registry done on our names (My father, my wife and myself), what is the safe and economically best way to transfer the property to my and my wife's name during when my father is alive.

First, you will have to compute the LTCG on sale of property which is sold by your father. Only LTCG will have to be reinvested to save tax. You may then purchase another property in all three names ie father, yourself and your wife. You and your wife both as joint borrowers may apply for home loan and may claim deduction u/s 24 and 80C. Your father may show the investment in the new property in his ITR and claim exemption u/s 54. After the completion of assessment of your father, he may then prepare a gift deed or a release deed transferring his share, rights and interest in the property in favor of you and your wife.
 

Thanks so much for your replies. this is realy helpful.

Can you please let me know what are the charges and duties for gift or release deed.

Aman i sugeest your father should transfer his property through will .... as u will automatically become the owner.... why do we bear charges for gift deed