I Have purchase 1 House Property at huge sum, i Have sold 2 house properties and also sold 1 capital Asset So can i Avail exemption U/s. 54 & 54F in all the 3 cases with only 1 new house property?
18 July 2024
Under Section 54 and Section 54F of the Income Tax Act, you can claim exemptions on capital gains arising from the sale of house property or any other capital asset, provided certain conditions are met. Here's how these sections generally work:
1. **Section 54 (Exemption on Sale of House Property):** - You can claim exemption under Section 54 if you have sold a residential house property (not necessarily your first house) and intend to purchase another residential house property. - Conditions: - The capital gains from the sale of the original house property must be invested in purchasing a new residential house property. - The new property must be purchased either 1 year before the sale or 2 years after the sale of the original property. Alternatively, you can construct a new house within 3 years from the date of sale. - If the entire capital gains are reinvested in the new property, the entire amount of capital gains is exempted from tax.
2. **Section 54F (Exemption on Sale of Any Capital Asset Other Than a House Property):** - Section 54F provides an exemption if you have sold any long-term capital asset other than a residential house property and intend to purchase a residential house property. - Conditions: - The exemption is available if you purchase a new residential house property within 1 year before the sale or 2 years after the sale of the asset. - Alternatively, you can construct a new house within 3 years from the date of sale. - The cost of the new residential house property must be equal to or more than the net consideration received from the sale of the original asset.
### Answering Your Query:
- **Multiple Properties Sold:** - If you have sold multiple house properties or capital assets, you can avail exemptions under Section 54 or Section 54F for each of these sales individually, provided you satisfy the conditions mentioned above for each transaction.
- **One New House Property:** - You can use the proceeds from the sale of multiple properties to purchase or construct only one new residential house property to claim exemption under Section 54 or Section 54F. - The exemptions are available separately for each sale, but the investment in the new house property cannot be split across different properties. It must be used to acquire or construct a single residential property.
### Practical Example:
- **Example 1 (Section 54):** - You sold House Property A and House Property B and made a profit. - You can claim exemption under Section 54 if you invest the capital gains from both sales into purchasing a new residential property within the specified timeframes.
- **Example 2 (Section 54F):** - You sold a plot of land and another non-residential property and made a profit. - You can claim exemption under Section 54F if you invest the net consideration received from both sales into purchasing a new residential property within the specified timeframes.
### Conclusion:
Yes, you can avail exemptions under Section 54 and Section 54F for the sale of multiple properties, provided you invest the capital gains or net consideration into purchasing or constructing one new residential house property in each case. The exemptions cannot be combined for the purchase of multiple new properties; they must be utilized for one new residential property per exemption claim. It's important to adhere to the timelines and conditions specified under each section to qualify for the exemptions.
For specific advice tailored to your situation, considering the nuances of tax laws and regulations, consulting with a tax advisor or chartered accountant would be beneficial.
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