One of the condition for being eligible for claim income tax exemption under Section 54F is that you should not own more than one residential house property on the date of sale of the asset except the one in respect of which you are claiming the exemption
I have two residential properties in my name bought more than 8 years back. I am planning to purchase another residential property in the next few months. I plan to fund this purchase by the long term gains from the sale of shares in this financial year. Will the gains of share sale in this financial year be taxable or can an exemption be claimed against purchase of a residential property in next financial year in respect of capital gains on sale of the shares?
Answer: In respect of capital gains arising on sale any asset other than a residential house, an individual or an HUF can claim exemption from long term capital gains if the net sale consideration in respect of such asset is invested for acquiring a residential house within a period of two years after sale of such asset. Even if a residential house is purchased within one year prior to sale of such assets the exemption is still available. In case you wish to self-construct a house or book an under construction house, you get an extended period of three years to complete construction of the house or get possession in case it is booked with a developer.
In case the sale consideration is not fully utilised for acquiring the residential house by the due date of filing of the Income Tax Return, the unutilised money has to be deposited with a bank under Capital Gains Account Scheme. The money so deposited can be utilised within the prescribed period for payment of house.
One of the condition for being eligible for claim this exemption under Section 54F is that you should not own more than one residential house property on the date of sale of the asset except the one in respect of which you are claiming the exemption. Since you already own two houses now, you are not eligible to claim this exemption available under Section 54F.
