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Sec 54 exemption for buying another house

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Long term gain on a residential house is exempt under Sec 54 if invested in a new house in India, bought within 1 year before or 2 years after the sale, or built within 3 years. If not invested by the return due date, the amount must be deposited in the Capital Gains Account Scheme. The exemption is capped at ₹10 crore.

Provisions

Sec 54 (now Sec 82); Sec 139(1) (now Sec 263(1))

Analysis

If you invest ₹40 lakh or more in the new house within the time, the full gain is exempt under Sec 54 (now Sec 82). If you had not bought by 31 July 2026, the unused amount should have been deposited in a CGAS account by then; a belated return filer may face a challenge on this point, so get advice. If the new house is sold within 3 years, the exemption is reversed. Keep the deed and payment proof.

Close

  1. Work out the long term gain on the old house.
  2. Check purchase or construction dates of the new house.
  3. Deposit unused gain in CGAS by the due date if not invested.
  4. Claim Sec 54 in Schedule CG with details.

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