Capital gain under section 54

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This discussion clarifies capital gains tax exemption under Section 54. It explains that if you sell one house and purchase two new ones for rental income, you may still claim an exemption. The key is that the profit from the sale should not exceed the cost of the new properties, and the purchase must be completed by the Income Tax Return filing deadline. If you deposit the sale proceeds into a Capital Gains Account Scheme, you can claim the exemption even if the new properties are purchased later, within specific timelines.

Shujaatali Ansari

Shujaatali Ansari (Querist)

13 June 2020 I had two houses, one is sold off and intend to purchase two houses for rental income, can I claim capital gain tax as I will possess total 3 residential houses ?

c.bakshi

c.bakshi (Expert)

13 June 2020 if you purchase two houses and sale one of your house. if profit derived out of sale of property is less than the purchasing of two house, then no capital gain liability arises subject to the condition you purchase the house on or before filing of your ITR due date.
if you purchased within 2 years of purchase and take 3 years to construct the property, then you have to deposit the money in capital gain account scheme.

Shujaatali Ansari

Shujaatali Ansari (Querist)

13 June 2020 Thank you sir.
Incase I deposit the money in capital gain scheme and I buy two houses after say 1 year but value is less then profit derived from sale of old house. Can I still invest in 54EC Bond even after lapse of 6 months?

c.bakshi

c.bakshi (Expert)

13 June 2020 YES, YOU ARE ALREADY AWARE ABOUT THE PROVISIONS. IF YOU SAVE THE MONEY IN CAPITAL GAIN ACCOUNT SCHEME, THEN YOU CAN PROCEED AND CLAIM EXEMPTION.

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