SEC 54 AND 54 F

Tax planning 242 views 6 replies

RAJU

ACCOUNTANT

58 Points Joined October 2017

Dear Sir , Kindly help us with the following queries regarding sec 54 and 54 F on capital gains

1 I have an LTCG from Equity Investments in 2018 -2019 FY for 30 lakhs ( Net consideration was 70 lakhs and LTCG 30L)

2 I don't have any house during this period . And I purchased a flat for around 85 lakhs in 2019 Dec , which was under construction . The flat was occupied in 2021 and Registration was made in 2022 Jan .. I have claimed an exemption under Sec 54 F in my return for AY 2019 -20.

3 . Now I am planning to buy another flat ( in 2024) . Can I get another exemption under Sec 54 F for this new flat , if I am investing my LTCG from shares , in 2024 ( I am planning to sell my shares in 2024) . Since the Original capital asset was sold in 2019 , i don't think I am violating the 1 year or 3 year statutory period for buying a new flat under sec 54 F . Is my view correct ? . Meantime I am keeping the flat regd in 2022 for 3 years .

4. If I am taking a housing loan for both the above flats , can I get deduction for the same irrespective of the fact that 54 f has been allowed earlier

5 If I sell the first flat after 3 years ( say in 2025) and invested in the new flat ( the same flat which I am planning to purchase in 2024)

can i get exemption under sec 54 . Any restrictions that the same flat will not be considered for the exemption 2 times ?

Because here I am using the new flat to claim exemptions under sec 54 F in Ay 2025 -2026 and sec 54 in 2026 -2027 Ay . Is this possible ?

Expecting your expert advice

Replies (6)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

197632 Points Joined July 2016

All your answers could be in affirmation, except the time period to purchase any another flat should be only after 3 years from the possession taken of the first flat. As you have taken possession in 2022 so plan next flat purchase in 2025,,,,,

sabyasachi mukherjee

27922 Points Joined May 2017

1. needs to be invested in house property.

RAJU

ACCOUNTANT

58 Points Joined October 2017

Dear Sirs

Thanks for the reply ..

The section is saying 2 conditions

1) Newly purchased flat ( claimed for 54F) should not be sold before 3 years of possession / Registration

2) Should not purchase / construct a new house before 1 year / 3 years , from the date of transfer of the original asset .

Point no 1 is pretty clear .

Regarding point 2 , since the original capital asset was the Equity Shares , and they are transferred / sold in 2019 , that means a new house can be owned after 2022 ( 3 years )

Kindly advice if this view is right

Harsh Khemchandani

126 Points Joined July 2021

The first exempted asset which you purchased needs to be sold after 3 years of its purchase/ construction. Then only purchase another Asset because the condition to have 1 rhp at a time is there.

RAJU

ACCOUNTANT

58 Points Joined October 2017

Dear Sir

Thanks for the reply . Agreed that the first exempted flat can be sold only after 3 years , to keep 54F

As per my understanding of the rules , I can own 2 houses

The person should not own more than one residential property other than the new one and must not buy or construct another residential property for two and three years, respectively, after the sale.of the original asset . So this means , he can own 1 + the new exempted 1 = 2 flats at the time of claiming 54F .

In my case I am not owning any house except the new flat ( sec 54 f claim) . Hence even if I am purchasing another flat ( after 3 years of the transfer of the original asset) using my new LTCG in shares , I think the conditions are met because totally I am owning only 2 flats , which is ok as per the rule

Pls advice if this interpretation is correct

Please advice if this interpretation is correct