Time allowed to buy another asset

August 2026.         

• Buy a single flat before Aug 2026 in joint names using combined funds.

• Maintain proper documents showing proceeds invested from both sales.

• This ensures full capital gains exemption for both sales.

Thankyou sir ..

suppose the spouse plot sale is 25 L (7L gains) and husband flat sale is 1.25Cr ( 65L gains).

Can the husband buy a shop on his name for 40L and a flat for 1.1Cr on the couple name.

No, this arrangement will NOT work for claiming full capital gains exemption. Here's why:

Key Issue with Your Proposal:

1. Section 54 Exemption (for Residential Property):

   - The husband's flat sale (₹65L gains) can ONLY claim exemption under Section 54

   - Section 54 requires investment in a RESIDENTIAL HOUSE property

   - A shop is a COMMERCIAL property and does NOT qualify

   - Therefore, buying a shop for ₹40L will NOT provide any capital gains exemption

2. Section 54F Exemption (for Plot/Land):

   - The wife's plot sale (₹7L gains) requires exemption under Section 54F

   - Section 54F has a strict condition: "You should NOT own more than ONE residential house (other than the new house) on the date of transfer"

   - If the husband buys a shop AND you jointly buy a flat, you'll end up with TWO residential properties

   - This violates the Section 54F condition

Correct Approach:

To claim FULL exemption on both capital gains (₹7L + ₹65L = ₹72L total):

✓ Buy ONLY ONE residential flat in joint names before August 2026

✓ Invest the combined sale proceeds (₹25L + ₹1.25Cr) or at least the combined gains (₹72L)

✓ Do NOT buy any commercial property (shop) if you want capital gains exemption

✓ Do NOT buy multiple residential properties

Alternative Option:

If the husband wants to buy a shop:

- He can buy the shop, but will have to pay capital gains tax on the proportionate amount NOT invested in residential property

- Only the amount invested in the residential flat (₹1.1Cr) will qualify for Section 54 exemption

- The ₹40L spent on shop will attract capital gains tax

Recommendation:

Invest the full ₹1.5Cr (or at least ₹1.4Cr to cover your investment cost + gains) in a SINGLE residential flat in joint names to avoid any capital gains tax liability.

Note: Maintain proper documentation showing investment from both sale proceeds for claiming exemption in your respective ITRs.

If the new flat is purchased on joint name for 72L minimum, then the capital gains tax can be avoided.

The remaining amount can't it be used for buying shop?

If the plot was a long-term capital asset, Section 54F may apply. The spouse who sold the plot must invest the net sale consideration in a residential house in India: purchase within one year before or two years after the transfer, or construct within three years. For an August 2024 sale, the purchase window is generally August 2023 to August 2026. If the plot was short-term, Section 54F is not available.

The husband’s October 2025 flat sale does not extend the spouse’s Section 54F deadline. A jointly purchased flat can qualify only to the extent the plot seller’s investment and ownership are properly established; combining funds does not automatically let one spouse claim the other’s exemption. The husband may separately consider Section 54 for his own sale, subject to its conditions and timelines. The exact treatment depends on each sale’s dates, holding period, sale proceeds and proposed ownership shares.

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