Capital Gains Tax: Section 54 Exemption Explained

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This discussion clarifies the eligibility for capital gains tax exemption under Section 54 of the Income Tax Act. While general renovations or repairs to an existing self-occupied property are not covered, you can claim an exemption if you undertake additional construction or significant improvements that are capital in nature. This applies when you've sold one property and are using the proceeds to enhance another existing property.

Md.Yacoob Shariff

Md.Yacoob Shariff (Querist)
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25 April 2024 Can the exemption under sec 54 claim from the long term capital gains, for the cost of improvement done in the self occupied property

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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26 April 2024 As you had spent money on renovation of house, which is capital in nature, you can claim the deduction for such expenses as cost of improvement of the house while calculating income taxable under the head, 'capital gain'.

Md.Yacoob Shariff

Md.Yacoob Shariff (Querist)
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26 April 2024 Sir thanks for the quick reply, but you have misunderstood my question, that I have to house property out of which I sold one from which I am in receipt of long term capital gains, and I am residing in another one. If I spend the amount on my exixting house property, can I claim this amount from the capital gains under sec 54?
this was my question sir
please

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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26 April 2024 Yes, you can claim exemption in such a case, in case of additional construction in the existing house.