Exemption from long terms capital gains tax u/s 54f

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Kapil Tiwari (Querist)
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22 May 2012 Can exemption from long term capital gains tax under section 54F be availed if one already owns a house?
If a person sells a plot of vacant land, purchased over 3 years ago, and from the sale proceeds of the land, he proposes to purchase a flat so that he can avail exemption of long term capital gains tax under section 54F and if he already owns one flat(house property), can he still avail the tax exemption by purchasing a second house property? Is there any limit to the number of house properties one already owns, prior to the purchase of this new house property, in order to avail the tax exemption under discussion?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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22 May 2012 Exemption u/s 54F is NOT available if the assessee:

(i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or

(ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or

(iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset

Accordingly, if the assessee already owns a flat, he CANNOT avail exemption u/s 54F by investing in a new flat.

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akash sharma

akash sharma (Expert)
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22 May 2012 as per 1st point assessee can buy one house for exemption as he is owning not more than one house on date of transfer, right?

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Kapil Tiwari

Kapil Tiwari (Querist)
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23 May 2012 Dear Sirs, if the assessee cannot avail tax exemption under section 54F, kindly advise what are the other avenues/ways to save tax.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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23 May 2012 He can invest in specified bonds and claim exemption u/s 54EC.

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