Section 54 exemption for transfer of residential property

1. Assessee had sold his old residential house in March 2021 for Rs. 1,37,00,000. LTCG arising from such sale was Rs. 65,00,000. In March 2021, he purchased another residential house for Rs. 2,06,00,000.

2. The new residential house was sold in Aug 2023 for Rs. 3 crores and another house was purchased in September 2023 for Rs. 3.2 crores.

Questions:

a. What will be the amount of taxable capital gains in the hands of assessee for FY 2020-21 and FY 2023-24?

b. Will there be any change in taxable capital gains if the assessee owned more than one residential house during FY 2020-21 & FY 2023-24?

Replies (5)
Quick Summary
This discussion explores the application of Section 54 exemption for capital gains tax when selling and purchasing residential properties. It addresses scenarios involving multiple property transactions across different financial years, including the impact of holding periods and the ownership of more than one house. The questions delve into calculating taxable capital gains, the potential reversal of exemptions, and the treatment of gains as short-term or long-term.

20-21
cost of inflation index calculate.
capital gain
23-24
cost of inflation index
capital gain.

Can the exemption under section 54 be availed for both FY 2020-21 and FY 2023-24?

For 20-21 I think you can't claim exemption as the property was not held for 3 years post purchase but for 23-24 you can claim 54f however provided you don't sell the same for three years. here you will have to reverse the exemption previously claimed on 65 lakhs and pay capital gain tax for the same.

even though multiple houses are owned if the consideration matches the value of the assets purchased and sold, I think there should be no problem

Capital gain on exemption claimed of Rs. 65 lacs will be taxable as Short term or Long term gain?

When was the asset purchased ?

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