Can tax exemptions be claimed under Sections 54 and 54F simultaneously for the same residential property?

Understanding property tax

• Sections 54 and 54F exemptions can be claimed for the same property if eligible.
• Tribunal backs simultaneous claims; higher court clarity pending
• Section 54: Residential property sales; 54F: Other long-term assets sales

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Both Section 54 and Section 54F share identical timelines and can be claimed together for the same property, subject to conditions. Tribunal rulings support simultaneous claims, though higher court clarity is awaited.

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I have sold a residential property in the current financial year and intend to buy another one. I also plan to sell equity mutual funds to fund the purchase. At present, I own only one residential property. Am I eligible to claim exemptions under both Section 54 and Section 54F for this purchase?

Expert’s Advice: Section 54 allows an exemption on long-term capital gains from the sale of a residential house held for over 24 months, provided the gains are reinvested in another residential property in India within the specified time frame.

Similarly, Section 54F grants an exemption on long-term capital gains arising from the sale of any long-term asset other than a residential house, provided the net sale proceeds are invested in purchasing or constructing a residential property within the prescribed time limit.

An exemption under Section 54F is available only if you own no more than one residential house on the date the capital asset is sold. In contrast, Section 54 has no such restriction, allowing the exemption even if you own more than one residential property at the time of sale.

The timelines for purchasing or constructing a residential house are identical under Sections 54 and 54F. The property must be bought within two years of selling the capital asset, or it may have been purchased up to one year before the sale. In cases of self-construction or under-construction properties, completion must occur within three years from the date of sale.

In my view, you can claim an exemption under Section 54 for long-term capital gains from the sale of a residential property and under Section 54F for long-term gains from equity mutual funds by investing in the same residential house.

Both sections are independent and operate for gains arising from different types of assets (residential house for Section 54; non-residential long-term asset for Section 54F). There is no statutory bar preventing simultaneous claims when the investment is made in the same new residential house.

In Venkata Ramana Umareddy v. Dy. CIT, the Hyderabad Tribunal ruled that exemptions under Sections 54 and 54F can be claimed simultaneously, as the provisions are not mutually exclusive. Similar rulings have been delivered by the Mumbai and Delhi Tribunals. However, there is no judgment on this issue from the High Courts or the Supreme Court.