Capital Gains - Sec 54F

As per section 54 F of the IT Act, if anyone sold the house of which exemption is claimed u/s 54F within a period of 3 years then deduction allowed previously will be taxable in the year in which such house is sold. it means exemption will be taken back.

however, Assessee is free to claim deuction U/s 54 this time coz selling residential property and again buying residential property.

Hope u understand clearly.

hi manoj..

u mentioned a good question..

exemption u/s 54 can be claimed for long term assest. as per ur question the house property sold before 3 years means it not satisfied for long term assets so exemption u/s 54 can't claimed.

Exemption u/s 54F is available only in case of sale of any capital asset other than residential property and investing the sale proceeds in a residential property. However, one can claim exemption u/s 54 by selling a residential property & purchasing another residential property. But section 54 is applicable only for Long term capital assets. in the case reffered above, a person has sold the property within 3 years of its purchase which means it is a short term capital asset & hence exemption u/s 54 is also not available.

Dear Manoj.

U/S 54F, Incase the assessee sells the house within 3 years the exemption allowed previously will be taxable in the year in which the Res. house is sold. Under this you will land in paying Capital Gains tax.. And Investing again in another Res. house wont make any difference (according to me)...

     Sale of New residential house for a Gain will be treated as Short term capital Gain and no exemption is available..

Regards

Balaji.C