Capital Gain Query on Resdential Propery

The husband and wife can claim exemption under section 54 by reinvesting the capital gains in a new residential property. However, they must ensure that the new property is purchased in their names or in the name of their spouse or minor child. The son's contribution to the purchase price of the new property will not effect the exemption available to the husband and wife under Section 54.

For residential property sales in AY 2026-27, the tax calculation depends on when you bought the property.

If you BOUGHT BEFORE July 23, 2024:
You have a choice between two options:
- 12.5% without indexation on the full gain
- 20% with indexation (using Cost Inflation Index to inflate your original cost)
The ITR-2 utility automatically computes both and lets you pick the lower tax figure.

If you BOUGHT AFTER July 23, 2024:
Only one option: 12.5% without indexation. No indexation benefit.

Holding period for LTCG: 24 months. If held for less than 24 months, it is STCG taxed at slab rates.

Section 54 exemption: If the property is residential and you reinvest in another residential house within 2 years (purchase) or 3 years (construction), you can claim exemption on the capital gain portion reinvested. There is no restriction on this exemption based on whether you took the indexed or non-indexed route.

Which ITR to file: ITR-2 if you have only property income and salary/pension. ITR-3 if you have business income too.

For the full breakdown with examples, this [capital gains guide for inherited and sold property AY 2026-27](taxgarden.in/blog/capital-gains-tax-inherited-property-sale-india-ay-2026-27) has the computation tables.