Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
How it works
When you sell a long-term residential house and reinvest the capital gain in another residential house in India, that gain is exempt. The window is one year before to two years after the sale to buy, or three years to construct. You only need to reinvest the gain, not the whole sale value — which distinguishes it from 54F.
Conditions and limits
The new house must be in India, and you must hold it for at least 3 years or the exemption is reversed. A cap of ₹10 crore on the reinvestment applies (from FA 2023). If you haven’t bought before your filing due date, park the gain in the Capital Gains Account Scheme. Confirm current limits and conditions per the Finance Act.
A worked example
Example: you sell a flat with a ₹60 lakh long-term gain and buy another house for ₹70 lakh within two years — the entire ₹60 lakh gain is exempt. Buy a cheaper house for ₹40 lakh and only ₹40 lakh of the gain is sheltered, leaving ₹20 lakh taxable. For selling assets other than a house, see Section 54F. Our team can plan the reinvestment.