Capital gains exemption u/s 54

Section 54 of the Income Tax law allows for capital gains exemption when selling a residential house and reinvesting in another residential property or constructing one. While land itself is considered a capital asset, the exemption under Section 54 specifically applies to the purchase or construction of a *house*. Therefore, simply buying land is not enough; you must construct a residential house on it within the stipulated timeframe of three years to be eligible for the exemption.