capital gains exemption while holding multiple properties

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  1. NitinJain

    NitinJain New Member


    My query is regarding capital gains from sale of a property while holding multiple properties.

    Property A : Bought in 2008 (currently on rent)
    Property B : Bought in 2011 (currently under construction and taken on loan)
    Property C : Planning to purchase in near future by selling property A (will be buying before selling property A)

    I currently hold 2 properties - Property A (on rent) and Property B (under construction and on loan). Now i am planning to buy another property - Property C on loan and after purchase of Property C, I plan to sell property A within few months.

    Here are my queries in this regard:

    1. Can I buy property C before selling property A and still claim capital gains exemption from sale of property A ?

    2. If property C is bought in March 2015 (FY2014-15) and property A is sold in Aug (FY2015-15), would I still be able to claim exemption even though txns are happening in different financial years?

    3. I read somewhere that "at the time of investment you should not own more than one property" to claim capital gains exemption from section 54. In my case, since I am buying "C" first and then selling "A", during this period until I sell property A, I would theoretically have 3 properties - prop A (not yet sold), prop B (under constr) and prop C (newly bot). Does this scenario restrict me to claim exemption under section 54 ?

    Thanks in advance.
  2. rudrabose

    rudrabose Active Member

    1. If property C is purchased anytime in the 1 year preceeding sale of Property A, capital gains exemption is allowed.
    2. Yes, even if the Financial Years are different - you can still claim the exemption
    3. The limit of 1 property is under Section 54F and not under Section 54. In your case Section 54 would be applicable and you can claim exemption.
    NitinJain likes this.
  3. NitinJain

    NitinJain New Member

    Thanks for your response Rudra. I got confused after reading this article - link. In this article under section - "How To Save Capital Gains Tax On Sale of Property In India" it talks about not owning more than 1 property at the time of investment. In point#4 of conditions to be adhered (image attached), it also talks about capital gains exemption not applicable when "additional property purchased after the newly bought property". If I would get Property B (under constr) registered in next few months, would that create a problem on exemption although I am not investing any gain proceedings in the property B at all ?

    Am I misinterpreting the info in this article ? Thanks again for your response.


    Attached Files:

  4. rudrabose

    rudrabose Active Member

    The article link mentioned by you has mixed Section 54 and 54F as a result of which the confusion is arising.

    This link will help you better understand the exact laws -
    NitinJain likes this.
  5. rudrabose

    rudrabose Active Member

    You have to invest the Capital Gains in Property C and the balance amount you are free to invest anywhere i.e either in property B or at any other place.
    NitinJain likes this.
  6. NitinJain

    NitinJain New Member

    That clarifies. Thanks a lot !
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