Proceeds from Mutual Funds used for buying house will it be Liable to Long term capital gains

Proceeds from mutual funds are subject to long-term capital gains tax if they're not exempt or if the gains exceed the exemption limit.

However, if you're using the proceeds to purchase a house, you might be able to claim exemption under Section 54 of the Income Tax Act.¹

 To qualify for exemption, you must invest the long-term capital gains in a residential house within two years from the date of sale of the mutual fund units.

 Additionally, the exemption is only available if you haven't owned more than one residential house, other than the new one, on the date of transfer of the mutual fund units.

Regarding joint ownership, yes, you can purchase a house jointly with family members.

The ownership structure you described, where B has the first ownership, followed by A and C, is possible.

 However, the tax implications would depend on the individual ownership shares and the tax laws applicable to each owner. In terms of taxation, each co-owner would be required to report their share of the income or gains from the property in their individual tax returns.

If the property is sold, each co-owner would be liable for capital gains tax on their share of the gains, based on their individual ownership percentage.

Yes, redemption proceeds from mutual funds attract capital gains tax even if you use the money to buy a house. But Section 54F provides a specific exemption route.

Section 54F applies when you sell a long-term capital asset (other than a residential house) and reinvest the NET SALE CONSIDERATION in a new residential property. Key conditions:

1. HOLDING PERIOD: Equity MFs and listed shares held more than 12 months qualify as long-term. Debt MFs (post-April 2023) are now taxed at slab rate regardless of holding period, so 54F does not help with those.
2. OWNERSHIP LIMIT: You must not own more than one residential house on the date of sale, other than the new house being bought.
3. REINVESTMENT: Buy the new house within 2 years of sale, or construct within 3 years. Reinvest the full net consideration for full exemption. Partial reinvestment gives a proportional exemption only.
4. CGAS DEPOSIT: If you cannot buy or start construction before your ITR due date, deposit the unutilised amount in a Capital Gains Account Scheme (CGAS) bank account. Withdrawal must be only for the house purchase.
5. LOCK-IN: Do not sell the new house within 3 years of purchase or construction.

For equity MF gains (12+ months): LTCG is taxed at 12.5% above Rs 1.25 lakh annually. Section 54F exemption overrides this if conditions are met.

This [Cost Inflation Index and indexation guide](https://taxgarden.in/blog/cost-inflation-index-cii-table-formula-indexation-capital-gains) has the CII table and LTCG calculation for FY 2026-27.