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Sec 54 deduction on renovation of house

Reshmitha (Audit Asst) (33 Points)

21 August 2019

Can we take sec 54 deduction on renovation(including extension) of existing house property?

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5 Replies

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 22 August 2019

at the time of selling the property you can get the benefit of indexation on improvement made to the house and can be reduced from the sale consideration. however you need to keep the documents, as it may be required by the dept if your case comes for scrutiny

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Kapadia Pravin (17249 Points)
Replied 22 August 2019

No section 54 deduction for renovation expenses.

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Shivam RC (Student) (23683 Points)
Replied 23 August 2019

Section 54 does not allows deduction for Renovation expenses. You will be eligible to deduct the COST OF IMPROVEMENT ( Indexation benefit, if long term ) from the Full Value of Consideration at the time of selling the capital asset.

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Reshmitha (Audit Asst) (33 Points)
Replied 27 August 2019

Thank you guys

Suresh Thiyagarajan (Student) (3986 Points)
Replied 27 August 2019

1. Sec 54 only allows a claim of exemption for the purchase of a residential house and not for the renovation of residential house property.
2. In your case, expenses incurred can be claimed as improvement and indexation can be applied on the same but it cannot be considered as exemption u/s 54.
Please correct me if the above solution has an alternative view.