How to claim Section 54F tax exemption on under-construction property and what timelines really matter

You can claim exemption under section 54F in respect of payments already made and being made

• 54F exemption allowed if construction finishes within 3 years
• Registration date is not relevant for claiming exemption
• Filing jointly with spouse won’t affect exemption eligibility

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Understand tax rules around property purchases and capital gains exemptions. Today’s Ask Wallet Wise query decodes whether staggered payments for an under-construction flat can still help you claim long-term capital gains tax relief, and what timelines really matter.

It also breaks down how registration timing and adding a spouse’s name could affect your eligibility for exemption under Section 54F.

The Ask Wallet-Wise initiative offers expert advice on personal finance and money-related queries. You can email your queries to askwalletwise@nw18.com, and we will try to get a top financial expert to address them.

I booked an under construction apartment in May 2025 and entered into an agreement with the builder. Periodic payments are being made to the builder which is likely to continue till May 2026. The major portion of these payments have been made from sale of long term Equity/MF/Gold bonds I had invested earlier.

1. Can I claim Long Term Capital Gains exemption u/s 54F for financial year 2025-26 based on the agreement and stage payments I have made to the builder, though the final payment is due next year?

2. Can I have the apartment registration done in the next financial year after final payment or I should do it within this financial year itself? Which date is considered for exemption purpose?

3. I am planning to get the apartment registered jointly with my wife name, me being the first person though only I am making the full payments and the agreement was done only in my name with the builder. Will this have any impact on the exemption claim? Venkataramani

Expert advice: Section 54F provides for exemption to individual and an HUF from long term capital gains arising from transfer of any capital asset other than a residential house property if the net sale proceeds from sale of such asset are utilised for purchase/construction of a residential house property within prescribed time period. So this exemption is available in respect of long term capital gains on sale of equity shares, mutual funds and gold bonds.

In case of purchase of ready to move in house, the purchase has to be done within two years from the date of sale of the capital asset/s. You can still claim the exemption if the house is bought within one year before sale of the capital assets.

In case of self-construction or booking an under construction of a residential house a long period of three years is allowed within which the construction of the house should get completed. The date of commencement of construction is not relevant for this purpose but what is relevant is completion of construction within the prescribed time period.

So you can claim exemption from long term capital gains arising from sale of equity shares, mutual funds schemes and gold bonds even for the flat booked before sale of such assets as long as the construction gets completed within three years from the date of sale of these capital assets. This exemption can be claimed in respect of long term capital gains arising from more than one type of capital asset as well as for the long term capital gains arising during more than one financial years as long as the condition of completion of construction gets complied irrespective of date of commencement of construction or date of payments made.

Please note that the date of registration of the agreement is also not relevant for this purpose so you will be able to claim exemption even if the agreement is registered in future. You can claim exemption under section 54F in respect of payments already made and being made.

Even if the agreement is made in your name, the same can be registered in jointly with your wife if the builder is willing to amend the agreement and even if the payment is made only from your account. It will not affect your ability to claim the exemption as long as the payment of the requisite amount is made by you.