How can I help my mother save tax on the sale of an ancestral property?

Ans: It is advisable to take valuation report from approved valuer who will make report considering ready recknor value decided by concerned gov authorities as on 1 4 2001. Sale consideration reduced by indexed value of FMV as on 1.4.2001 will be capital gain.

To save tax, you can acquire house property and get exemption u/s 54F. As per section 54F, if you want to buy a residential house property from long term capital gain from sale of shares then you must buy the residential house property 1 year before or 2 years from date of such transfer of shares or construct the house property within 3 years from date of transfer of such shares. If amount can not be utilised before filing return then amount should be kept in CGAS.

Ans: 54 EC Capital Gain Tax Exemption Bonds of REC and PFC

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Ans: For your mother to claim capital gains tax exemption under Section 54 of the Income Tax Act, the property must meet certain conditions:

Key Conditions for Section 54 Exemption
Ownership: The new property must be purchased in your mother’s name.
Timeframe: Purchase should be within 1 year before or 2 years after the sale of the original property.
Type of Property: Must be a residential property in India.
Can She Register the Property in Your Name?
No, she cannot claim the tax exemption if the property is directly registered in your name.
The exemption is strictly allowed when the new property is purchased in the name of the seller (your mother).
Alternative Option: Gift Deed After Purchase
Your mother can purchase the property in her name and claim the exemption.
After the purchase, she can execute a gift deed to transfer the property to you.
A gift from mother to child is tax-free under the Income Tax Act.
However, you may incur stamp duty charges on the gift deed, depending on your state’s rules.
Why This Approach Works
The Income Tax Department recognizes the exemption because the initial purchase was in your mother’s name.
The gift deed is treated separately and doesn’t affect her eligibility for the exemption.
Final Suggestion
Buy the property in your mother’s name to claim the exemption.
Afterward, transfer it to you through a gift deed to avoid capital gains tax for both of you.
Consult a tax expert for proper documentation and compliance.
This ensures tax savings and a smooth transfer of ownership.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: 01. Please may plan to purchase the house property in joint name with your mother. She can claim exemption from LTCGs in her ITR.
02. After purchase of property, you may get her WILL Registered in your favor, so that you become the sloe owner of property after her. Even during her life, she can make a gift in your favor.
Most welcome for any further clarifications. Thanks.

Ans: Yes. your mother can Gift 25% share in the Flat to all 4 children. This will not attract LTCG/Income Tax.
It may create practical problems, if any of the child wants to sell his/her share. It is easy to sell Flat, than to sell 25% share in the Flat. You need to consider this aspect, before taking any decision.
Most welcome for any further clarifications. Thanks.