Tax exemption u/s 54

Under Section 54 of the Income Tax Act, an individual or HUF selling a residential property can avail tax exemptions from Capital Gains if the capital gains are invested in purchase or construction of residential property. 
 

WILL THE EXEMPTION ALLOWED IN FY 24 & FY 25

Under Section 54 of the Income Tax Act, an individual or HUF selling a residential property can avail tax exemptions from Capital Gains if the capital gains are invested in purchase or construction of residential property. 

• The asset sold is a Residential House. Income from such a house should be chargeable as Income from House Property.
• The seller should purchase a residential house either 1 year before the date of sale/transfer or 2 years after the date of sale/transfer. In case the seller is constructing a house, the seller has an extended time, i.e. the seller will have to construct the residential house within 3 years from the date of sale/transfer. In case of compulsory acquisition, the period of acquisition or construction will be determined from the date of receipt of compensation (whether original or additional compensation)
• If the new house is sold within 3 years from the date of purchase or construction,  then the exemption claimed earlier under section 54 shall be indirectly taxable in the year of sale of the new house property.