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Sale of residential property with Sec 82 (old 54) exemption

  • If you sell a house you held over two years and put the gain into another house in India, the gain is exempt up to the amount you reinvest (capped at ₹10 crore).
  • Deadline: New house: bought 1 year before or 2 years after the sale, or built within 3 years. Unused gain: deposit in Capital Gains Account Scheme before the return due date (AY 2026-27: 31 July 2026 for ITR-2). Advance tax in the quarter of sale.
  • Done in 3 working days after sale deed, purchase deed and payment proofs
  • Prepared by your Savvy, checked by a CA
  1. Sale deed and agreement to sell
  2. When and how did you acquire the house
  3. Compute full value of consideration
  4. Capital gains computation with exemption note
The law and the stepsPay and start · ₹4,999Per event, + 18% GST

Answer in brief

If you sell a house you held over two years and put the gain into another house in India, the gain is exempt up to the amount you reinvest (capped at ₹10 crore). We compute the gain, test the timelines, open or guide the Capital Gains Account if the new house is not ready, and report the exemption in your return.

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From the official sources

What the law says, and what trips people up

From the official portal's manuals and FAQs, with the source for each point.

The law

  • Income-tax Act 1961, Sec 54(1) (now Sec 82)

    Individual or HUF; long-term residential house whose income is under 'house property'; buy a new house in India 1 year before or 2 years after the transfer, or construct within 3 years; exempt to the extent of the cost of the new houseSource

  • Income-tax Act 1961, Sec 54(1) (now Sec 82) proviso (two houses)

    If the gain does not exceed ₹2 crore, the gain may be invested in two houses in India; option can be used only onceSource

  • Income-tax Act 1961, Sec 54(1) (now Sec 82; ₹10 crore cap, from AY 2024-25)

    Cost of the new house above ₹10 crore is ignored, also for the CGAS depositSource

  • Income-tax Act 1961, Sec 54(1)(i) (now Sec 82) and (ii) (lock-in)

    If the new house is sold within 3 years, its cost is reduced by the exempted gain (or taken as nil) when computing the gain on that saleSource

  • Income-tax Act 1961, Sec 54(2) (now Sec 82) and Capital Gains Accounts Scheme 1988

    Gain not used before the Sec 263(1) (old Sec 139(1)) due date must be deposited in a notified bank scheme before filing; unused deposit is taxed in the year the 3-year period from transfer endsSource

  • Income-tax Act 1961, Sec 112 and 2(42A) (now Sec 2(101))

    Land or building held over 24 months is long term; 12.5% without indexation for transfers on or after 23 July 2024; resident individual or HUF with property bought before 23 July 2024 may pay the lower of that and 20% with indexationSource

  • Income-tax Act 1961, Sec 50C (now Sec 78)

    Stamp duty value replaces the agreed price if it exceeds 110% of it; agreement-date value applies if part payment was by banking mode on or before the agreementSource

  • Income-tax Act 1961, Sec 49(1) (now Sec 73)

    For an inherited or gifted house, cost is the previous owner's cost plus improvementsSource

  • Income-tax Act 2025, Sec 82 (corresponds to old Sec 54)

    From tax year 2026-27 the house-to-house exemption is Sec 82; Sec 50C becomes Sec 78 and Sec 49 becomes Sec 73Source

  • Government fee

    No government fee to claim the exemption. Tax on any taxable balance at 12.5% (or 20% with indexation where chosen) plus surcharge and cess. Source: https://incometaxindia.gov.in/Tutorials/15-%20LTCG.pdf . Stamp duty on the new house is a state levy and is not part of this process.

  • Late fee or penalty

    If the unused gain is not deposited in CGAS before the return due date, the exemption on that part is at risk (tribunals differ on a belated return). Source: https://bcajonline.org/journal/capital-gains-account-scheme-due-date-for-deposit/ . Late return fee under Sec 428 (old Sec 234F) of ₹5,000 (₹1,000 if income up to ₹5 lakh). Source: https://www.incometaxindia.gov.in/w/section-234f

On the portal

  1. Download AIS to check the SFT entry from the registrar for the sale and the buyer's TDS credit
  2. e-File > Income Tax Returns > File Income Tax Return > AY 2026-27 > ITR-2
  3. Schedule CG > Long-term > Sale of land or building: add one entry per property with sale value, stamp duty value, cost, improvement, expenses and dates
  4. In the same entry, choose deduction under Sec 54 and enter the new house cost, date of purchase or construction, and CGAS deposit amount, date and account number
  5. Check the computed tax, pay any balance via e-Pay Tax, and e-verify

What trips people up

  • New house bought after the return due date without a CGAS deposit

    Deposit in CGAS before the Sec 139(1) due date; some tribunals allow purchase before a belated return, others do notSource

  • Sale below circle rate taxed on stamp duty value

    Check the 110% tolerance and agreement-date proviso; ask for valuation officer reference if stamp value exceeds market valueSource

  • Two properties clubbed in one Schedule CG row

    The ITR-2 manual requires a separate computation for each land or buildingSource

  • NRI computes tax using indexation

    The 20% indexed option is for residents only; NRIs pay 12.5% without indexationSource

  • Claimed both Sec 54 and 54F on overlapping houses without checking the 3-year lock-in

    Map each house to one exemption and diary the sale restrictionsSource

People ask

Can I buy two flats with the gain?

Only if the gain is ₹2 crore or less, and only once in your life.Source

Do I need to reinvest the whole sale price?

No. Under Sec 54 only the capital gain needs to be reinvested (Sec 54F, for non-house assets, needs the net sale price).Source

I bought the new house 10 months before selling the old one. Does it count?

Yes. Purchase up to 1 year before the transfer qualifies.Source

What happens if I do not use the CGAS money?

The unused amount is taxed as long-term gain in the year the 3-year period from the sale ends.Source

Is there a cap?

Yes. New house cost above ₹10 crore is ignored from AY 2024-25.Source

IDFD

How we solve it: 4 steps

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Step 1 of 4 · What we need from you

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  • Sale deed and agreement to sell
  • Stamp duty value on agreement and registration
  • Original purchase deed and payments
  • Improvement bills with datesOptional
  • Brokerage and transfer expense receiptsOptional
  • New house agreement, deed or builder receipts
  • CGAS passbook or deposit receiptOptional
  • Inheritance or gift papersOptional

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Per event. Delivered in 3 working days after sale deed, purchase deed and payment proofs. Due: New house: bought 1 year before or 2 years after the sale, or built within 3 years. Unused gain: deposit in Capital Gains Account Scheme before the return due date (AY 2026-27: 31 July 2026 for ITR-2). Advance tax in the quarter of sale.

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