Exemption under section 54

This section is available for those who is buying residential house property and again sales it.

lets understand how we can save our capital gain of house property from tax

According to Income Tax Act if you are going to sell your house property and any gain arises this gain will get exempt under section 54 if you are investing in another house property using this capital gain amount.

Conditions for availing exemption under section 54 are

a) This capital gain amount must be utilize for investment in House Property.

b) Investment should be made within 1year or 2 years after construction

c) If you are constructing house property such construction should be made within 3 years

d) Gain amount arose from house property sell shall be deposited in Capital Gain deposit Account Scheme within 6 months from capital gain

e) If Capital Gain amount is upto Rs.2 crore you can invest in more than one house property also. only condition is that gain amount should not be more than Rs.2 crore ( this benefit is available only once in a lifetime )

Available Exemption amount is lower of :

1. Capital Gain Amount or
2. Investment amount

whichever is lower

Lock in period for holding new house property : 3 Years

"On sale of house property within 3 years while computing  capital gain upto the amount of exemption will be reduce from cost of acquisition."