Exemption u/s 54 and 54f

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ML SHARMA (Querist)
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30 July 2016 Dear All,

Please clarify the interpretation of section 54 and 54F in following two cases :-

1. A Individual is already owning 10 residential house properties. Now he sold one hose property and purchased a new house property (only one) whether he is eligible to claim exemption u/s 54 ?

2. A Individual is owner of a residential house property and a shop. Now he sold a shop and purchased a new house property (only one) whether he is eligible to claim exemption u/s 54F ?

CA Mohit Bansal

CA Mohit Bansal (Expert)
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31 July 2016 1.Under category covered by Section 54, long-term capital gains arising on sale of residential house properties are exempt if such gains are invested for purchase or construction of another residential house. There is no restriction as to the number of residential houses you can own as on the date of sale of such house for claiming this exemption under Section 54.
2. in order to claim the exemption under section 54F which covers long-term capital gains on assets other than residential house, you should not own more than one residential house other than the one you are acquiring on the date of sale of the other asset. So in case you own more than one house on the date of sale of the asset except the house in which you are investing the long-term capital gains, you can not avail the capital gains tax exemption by investing in a residential house under section 54F.