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NRI Query: Capital Gains Tax Exemption under Section 54 for 3rd Residential Property

38 views 1 replies

Jaikumar

PVT

32 Points Posted on 27 June 2026

I am an NRI seeking clarification on Long-Term Capital Gains (LTCG) tax exemption under Section 54 of the Income Tax Act. I would appreciate your expert guidance on my specific scenario:

Scenario Details:

Asset Sold: Residential house property in India (held for >24 months, thus treated as a Long-Term Capital Asset).
Residential Status: I am currently an NRI.
Existing Assets: I currently own two residential properties in India.
Proposed Investment: I intend to reinvest the Long-Term Capital Gains (LTCG) into the purchase of a 3rd residential house in India.

My Questions:

Eligibility: Does my existing ownership of two residential properties disqualify me from claiming exemption under Section 54 when selling a residential house? (My understanding is that Section 54 does not have a "number of houses owned" restriction, unlike Section 54F—please confirm).

Replies (1)

Thinking Bridge

Practical Finance Training

143 Points Posted on 27 June 2026

Yes, the benefit under section 54 is available to an NRI for long term capital gain from the sale of a house property, if the sale proceeds are invested in the purchase or construction of a new house in India within the stipulated time frame. The number of house property already owned by the NRI, whether 2nd, 3rd or other, would not by itself prohibit the claim of exemption under section 54. Nevertheless, the criteria for exemption under section 54 are to be met.