Exemption u/s 54F

This query is : Resolved

Manoj (Querist)
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02 December 2010 A person has claimed exemption u/s 54F by investing the consideration in residential house. The person is selling the house before 3 years from the date of purchase. In this case, the sale consideration will be taxable.

Can the person purchase a house again before two years of claiming the exemption u/s 54F and claim exemption again u/s 54F ?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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04 December 2010 It will be wrong to say that entire Sales Consideration of New House will be taxable.

Please go through the illustration given below-

Sales Consideration of New House 500

Cost of Acquisition of New House 400
--------
STCG (Sold before 3yrs of its acquisition) 100
Exemption claimed Earlier U/s 54F
when the old house was sold
is suppose 150 then this 150 will be taxed as LTCG in the year of sales of new house.

So total Capital Gains
STCG 100
LTCG 150

After claiming deduction U/s 54F, if within 2 years a new house is purchased then the LTCG claimed to be exempt earlier will be treated as taxable in the year of purchase of second new house.

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