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Section 54F exemption on reinvestment

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Vamshi Krishna Reddy Pathi

CA Practice

21 Points Posted on 22 July 2024

if an assessee sells a residential property within three years of purchase after availing tax exemption under section 54F and then buys another residential property. Whether since assessee invested sae proceeds of second house again in purchase of new house residential house with in period of two years, the exemption can still be maintained ?

Replies (2)

Quick Summary

This discussion explores the implications of reinvesting Section 54F exemption proceeds into a second residential property. The consensus is that if the first property purchased with the exemption is sold within three years, the original tax exemption is likely to be withdrawn. This means the capital gains from the initial sale would become taxable in the year the first new house was sold, regardless of any subsequent investment in another property. Professional advice is recommended for specific circumstances.

CA Anoop Kumar Sharma

Accounts Manager

1470 Points Posted on 22 July 2024

As per my opinion first new house was sold within three years, the exemption claimed under Section 54F would be withdrawn. It means capital gains from the original sale would become taxable in the year in which the first new house was sold, irrespective of the subsequent investment in another residential house. But i also recommedated to you consult more professional.