sec 54 exemption
This query is : Resolved
14 March 2018
I sold one long term capital asset (residential house property)
and now purchased 2 residential house properties in different places
can I claim exemption for both house properties?
14 March 2018
no you cannot as the amendment to section 54 has limited to the scope of exemption to purchase of "one residential house"
14 March 2018
thank you sir
14 March 2018
you are most welcome.
15 March 2018
This amendment is came from AY 2015-16 that to claim for one residential house property
Situation is the Assessee is sold residential house property in 2012-13 and purchased one residential house property and also constructed another residential house property in different places.Can Assessee can claim exemption for both residential house property?
23 July 2025
Under Section 54 of the Income Tax Act, the exemption on long-term capital gains from the sale of a residential house is available if the capital gains are reinvested in one residential house property. However, there has been an amendment that specifically limits the exemption to the purchase or construction of only one residential house. This was introduced in Assessment Year 2015-16.
Let's address your specific query:
Scenario 1: Sale of Residential Property in AY 2012-13, Purchase of One Residential Property and Construction of Another
The assessee sold a residential property in AY 2012-13 and has used the capital gains to purchase one residential property and construct another residential property at different locations.
Can the assessee claim exemption for both residential properties?
The answer is no, the assessee can only claim the exemption for one residential house property as per the amended provisions of Section 54. This one house property can either be purchased or constructed.
Even though the capital gains are utilized for both purchase and construction of residential properties, under the amendment, the exemption is only available for one house.
Key Points to Remember:
Amendment to Section 54 (from AY 2015-16) specifies that the exemption is available for only one residential house property.
The amendment restricts the exemption to either:
One residential house purchased, or
One residential house constructed.
The exemption cannot be claimed for multiple houses, even if the investment is made in two or more properties.
Exception:
The only exception to the above limitation is if the capital gains are used to purchase or construct a house property in India, but the exemption still applies only to one property.
So, in your case, the assessee can claim the exemption for either the purchased property or the constructed property (but not both). It is important to ensure that the purchase or construction happens within the required time frame (i.e., within 1 year before or 2 years after the sale for purchase or within 3 years for construction).
Let's address your specific query:
Scenario 1: Sale of Residential Property in AY 2012-13, Purchase of One Residential Property and Construction of Another
The assessee sold a residential property in AY 2012-13 and has used the capital gains to purchase one residential property and construct another residential property at different locations.
Can the assessee claim exemption for both residential properties?
The answer is no, the assessee can only claim the exemption for one residential house property as per the amended provisions of Section 54. This one house property can either be purchased or constructed.
Even though the capital gains are utilized for both purchase and construction of residential properties, under the amendment, the exemption is only available for one house.
Key Points to Remember:
Amendment to Section 54 (from AY 2015-16) specifies that the exemption is available for only one residential house property.
The amendment restricts the exemption to either:
One residential house purchased, or
One residential house constructed.
The exemption cannot be claimed for multiple houses, even if the investment is made in two or more properties.
Exception:
The only exception to the above limitation is if the capital gains are used to purchase or construct a house property in India, but the exemption still applies only to one property.
So, in your case, the assessee can claim the exemption for either the purchased property or the constructed property (but not both). It is important to ensure that the purchase or construction happens within the required time frame (i.e., within 1 year before or 2 years after the sale for purchase or within 3 years for construction).
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