An official of the Urban Development Ministry said Sharma has vacated the 10 Rajaji Marg house, which is being readied for Mukherjee who will demit office in July this year.
The bungalow was occupied by former President A P J Abdul Kalam till his death in 2015, after which it was allotted to the minister.
Sharma has been allotted a new bungalow at 10 Akbar Road, an official in the Tourism Ministry said.
The minister had earlier said the Urban Development Ministry had asked if he had any objection to vacating the house.
A retired president is entitled to rent-free accommodation anywhere in India with free water and electricity for the remainder of his/her life as per the President's Pension Rules, 1962.
The 10 Rajaji Marg house is spread over an area of 11,776 sq feet with the ground floor housing a library and an attached reading space.
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