Capital gain investment reconstruction joint ownership

It is debatable but it can work as you are operating and claiming exemption in the same fashion as in a JDA contract but I would suggest you to add your mother as a co owner after you demolish the first property and start to construct the new property or sell your property to your mother at the rate where you don't attract capital gain and let her construct new property.

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It will be subject to litigation. If the entire property will be demolished and reconstructed again then possible but subject to litigation. If part of the property is getting reconstructed then it would not be allowed.

Hi,

Reconstruction of house property is not eligible for exemption from capital gain.

However, your mother can save capital gain if she buys property from you. However you need to factor the cost of transfer of property in this case. If the cost of transfer is significantly higher than this option will not make sense.

Alternatively, she can invest in REC/NHAI bonds to save capital gain tax.

Dear Sir,

Hope you are doing well !!

As per Section 54 of Income Tax Act, any long term capital gain arising from the sale of a residential property shall be exempt to the extent such capital gain is invested in the purchase of another residential property within one year before or two years after the due date of transfer of the property sold or construction of residential house property within a period of three years from the date of transfer/sale of property.

Since, the requirement under this provision is to buy or construct a house, the amount spent on renovation of the existing house will not be allowed covered under Section 54. However, if any new construction is done in this house like construction of another floor, it could be allowed as an investment under this provision.

However, she can take the benefit of section 54EC.