Exemption u/s 54 - Sale of two separate residential properties

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An assessee sold two separate residential flats, generating long-term capital gains from both. They then invested the entire proceeds into purchasing a single new residential flat. The question arises whether exemption under Section 54 can be claimed twice for the sale of both properties, even though only one new property was purchased. The consensus is yes, provided all other conditions of Section 54 are met, as there's no restriction limiting the exemption to the sale of just one residential property.

niki

niki (Querist)

14 October 2024 Hi All,

An assessee owned two separate residential flats.
She sold both these flats during the previous year…i.e. one flat for 150 lakhs in April and other flat for 160 lakhs in August.
LTCG from these flats stood at 123 lakhs and 138 lakhs respectively.
She utilised the entire proceeds from sale of both flats for purchasing one new residential flat for 335 lakhs.
Can she avail exemption u/s 54 twice in the same assessment year ?
Will LTCG arising out of both flats be exempt u/s 54 for investment in the same new residential flat ? or does she have to buy 2 separate residential properties ?

Thanks & Regards
Niki

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

14 October 2024 Will LTCG arising out of both flats be exempt u/s 54 for investment in the same new residential flat ?

Ans: YES...

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

14 October 2024 There is no restriction placed in section 54 which restricts exemption only in respect of sale of one residential house. Even if assessee sells more than one house in the same year and the capital gains is invested in a new residential house, the claim of exemption cannot be denied if other conditions are fulfilled. [DCIT v. Ranjit Vithaldas [2012] 23 taxmann. com 226 (ITAT-Mum)]

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