Exemption u/s sec 54 - residential house - query

I am buying a residential flat (Property#1) by borrowing housing loan from bank now. Say 1 year later, If I sell another residential house (Property#2) and apply the sale proceeds out of #2 to close my housing loan of my flat (#1), can i claim exemption u/s 54 for the capital gains arising out of the residential house #2 ?