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Exemption u/s 54

113 views 1 replies

Abhay Gupta

27 Points Joined April 2020

I am a CA Inter Student...

I learnt that to avail the exemption u/s 54 (Capital Gain), one should purchase a residential House Property (RHP) within 2 year of transfer (or, before 1 year of transfer) or construct the house property within 3 years pf transfer.

I have a doubt whether purchase of a RHP and then improving it (making additional floors) amounts to construction?

Can I purchase a RHP after 2 year (before 3 year) and reconstruct it and avail the same exemption?

Replies (1)

CA. Sourav Sarkar

Chartered Accountant

24588 Points Joined November 2019

Yes by making additional floors that should be construction by cost of improvement

No, you have to hold the property for minimum 3 years, if you sale the said property before that you are not eligible for deduction u/s 54 because it is available only for LTCG
in that case if you sale it then such deduction will be taxable.. You should purchase the RHP within 2 years after transfer but after holding of the property for 3 years