Hi,
As you father has owned the property from inheritance. He is liable to pay the capital gain tax, if any arises on sale of property.
It is advisable that he should get the money transferred in his account (you can be the joint owner of that account).
and after investing the money in capital exemptions scheme under section 54. or paying taxes, he can gift the remaining money to you through gift deed.
you can get the gift deed done on plain paper and have to show the amount received under exempt income while filing the return.
Yes, he can invest the money to buy a house. House can be purchased in joint ownership with your name as first or second holder.
The exemption under this section is only available to persons that satisfy the following conditions:
An individual or Hindu Undivided Family (HUF) that legally maintains ownership of the house property;
The house property is used only for residential purposes;
The house property is a long term capital asset, and was not transferred or sold within the first three years after the initial date of purchase or construction.
To claim the exemption, one must invest the proceeds derived from the sale of the house property into another residential house either within two years from the date of the sale or one year prior to sale, or one must invest in the construction of a new house within three years of the sale.
The exemption amount will be:
Equal to the amount of the capital gains if the cost of the new house property is greater than the capital gains; or
Equal to the cost of the new house property if the cost is less than the capital gains.
Meanwhile you can park your capital gain (full amount or utilized amount) in CGAS (Capital Gain Account Scheme)
This is only a stop-gap arrangement, as the funds have to be used to buy or build a house within the period specified.
The deposited money can be used only to buy or construct a residential house within the prescribed time frame.
If you withdraw funds from this account, they have to be used within 60 days.
If you do not utilize the amount within three years of the sale of the first property, such un-utilized amount will be treated as LTCG this will lead to taxation of the unutilized amount as long-term capital gain after three years of the sale of the first / original property.
The interest rates paid on these accounts are the same as those on regular savings and term deposits. Kindly note that interest earned on this account is taxable.
You can invest the capital gain amount in bonds under section 54EC:
Capital gains from sale of any long-term asset can be claimed as tax-exempt under Section 54EC of the Income-Tax Act by investing in notified bonds within six months of the transfer of Asset.