Will You Get Exemption U/s 54 On Sale Of House, If You Own More Than One House?

Q. If an assessee owns three residential properties. Out of which he sells one residential property and invests the profit on sale of property in another residential property within two months of date of sale. Is the assessee liable to pay the long term capital gain? Will he get exemption u/s 54?

Ans. Yes, you will get the exemption u/s 54 to the extent the capital gains is utilised.
The provision does not bar that if somebody has more than one residential property, exemption u/s 54 shall be applicable. In my opinion, the conditions envisaged in the provision are

(a) The property sold should be residential house property or land appurtenant to;
(b) Income out of such residential property should be assessable under "Income from
house property";
(c) Property sold should be held for more than 36 months before it is sold;
(d) The property purchased should be residential property;
(e) The residential property should be purchased within one year before or within
two years of sale
(f) In that case, the capital gains is exempted to the extent capital gains is
invested.

If the property sold by you fulfills all the aforesaid conditions, you will be eligible for exemption u/s 54 of the I.T Act.

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