Section 54 Exemption query

This query is : Resolved

CA Parul Saxena (Querist)
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21 February 2020 If a person purchase a property by investing capital gain amount whether he can gain exemption under Sec 54 if he purchase property as co owner..?

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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24 February 2020 Logically he is entitled as he is a co-owner. Section 54 nowhere states about the extent of ownership. but the assessing officer may interrupt his claim of section 54 on the ground that he was not the sole owner of the property. One may have to satisfy the AO in such cases but probably safer side will be to name the assessee as the first co-owner. There are judgments entitling section 54 even in cases where investments were made in the name of family members, though most of those judgments were in the context of section 54F. But going by the ratio expressed, there should not be much of a problem.

Eswar Reddy S

Eswar Reddy S (Expert)
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29 February 2020 To get exemption , the entire capital gain portion should be invested. So if you are a co-owner then your share must be atleast equal to your capital gain.. As above member said , there are few judgement s which allowed exemption for family members too.

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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25 May 2020 The exemption The exemption under section 54 is available when the capital gains from the sale of house property are reinvested into buying or constructing two another house properties (prior to Budget 2019, the exemption of the capital gains was limited to only 1 house property).The exemption on two house properties will be allowed once in the lifetime of a taxpayer, provided the capital gains do not exceed Rs. 2 crores. The taxpayer has to invest the amount of capital gains and not the entire sale proceeds. If the purchase price of the new property is higher than the amount of capital gains, the exemption shall be limited to the total capital gain on sale.
Conditions for availing this benefit

1. The new property can be purchased either 1 year before the sale or 2 years after the sale of the property.

2. The gains can also be invested in the construction of a property, but construction must be completed within three years from the date of sale.

3. In the Budget for 2014-15, it has been clarified that only 1 house property can be purchased or constructed from the capital gains to claim this exemption.

4. Please note that this exemption can be taken back if this new property is sold within 3 years of its purchase/completion of construction.