1 The cost of the property will be with reference to the cost of the donor, i.e., the sister of your mother. As the property seems to be acquired by the donor before 1981, the market value as on 1st April 1981 will be considered as the cost of acquisition of the property. Thus if the cost of acquisition as on 1st April 1981 is Rs. 100, its cost will be Rs 1,081 during the current financial year.
2 The sale proceeds on sale of residential apartments ( and not on the piece of land) can be used for the purpose of acquiring a new residential house to claim exemption u/s 54, subject to fulfillment of conditions specified therein. She will not be eligible to claim exemption u/s 54F as she already owns a residential house.
3 She can use the sale proceeds for investment in capital gains bonds upto Rs. 50 L, even if she has residential apartments in her name. The investment will be for a period of 3 years and thereafter, the amount can be used for any purpose as your mother thinks fit without any tax liability.