• Reinvestment of residential property

I had bought a ot in 1992 on my wifes name. We have planned to sell it and reinvest to buy a residential flat. My questions are
1. Is it necessary to reinvest the total sale amount or just Long term capital gain can only be invested.
2. Since in old property wife has the 100% ownership. Can she reinvest with joint ownership with husband?
Please help.
Asked 20 days ago in Capital Gains Tax

1. You need to re-invest only Long term Capital gain amount - Sec-54(1)

2. Yes, she may re-invest with joint ownership as long as she utilizes the sales proceeds from residential property. Refer case - 

Mrs. Jennifer Bhide, Bangalore vs Assessee on 30 July, 2010

link - https://indiankanoon.org/doc/184165840/

Nabin Shrestha
CA, Chennai
5 Answers

Not rated

It seems property to be sold out is plot

1. Total sale amount. Benefit would be available u/s 54F

2. Yes

New Property should be purchased within 2 years or constructed within 3 years from the date of sale of the property. To avail the exemption, either utilize the total sale amount in purchase/construction of new residential house property or deposit in capital gain account scheme before the due date of filing of the ITR

As the property was purchased before 01.04.2001, you can opt for stamp duty value of the property as on 01.04.2001 as the cost of acquisition if it is more than the actual cost of acquisition. You can also claim cost of improvement if it is of capital nature and supported by proper documentation. Interest of housing loan can also be considered as a part of cost of acquisition if no other benefit of the same has been claimed

At the date of transfer of plot (original asset), your wife should not own more than one residential house property (other than new house). The new house property should not be transferred within 3 years of its purchase or construction



For detailed discussion you may opt for phone consultation

Vivek Kumar Arora
CA, Delhi
4885 Answers
1069 Consultations

5.0 on 5.0

If what you are selling is a plot then you need to invest entire sale value otherwise only the gain amount.


Also, if you want to include both names then her share would only be allowed as exemption and you might have to respond to notices stating that entire amount of sale was invested.


Hope you find the information helpful, if yes do rate if 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
4288 Answers
98 Consultations

5.0 on 5.0

  1. Total Sale Amount:

    • To avail exemption under Section 54F, reinvest the entire sale amount of the plot.

  2. Reinvestment Conditions:

    • Purchase a new residential property within 2 years, or
    • Construct a new residential property within 3 years, or
    • Deposit the sale amount in a Capital Gains Account Scheme (CGAS) before the due date of filing the ITR.

  3. Cost of Acquisition:

    • For property purchased before 01.04.2001, use the higher of the actual cost or stamp duty value as on 01.04.2001, indexed.
    • Include documented capital improvements and housing loan interest (if no other benefits claimed).

  4. Ownership Condition:

    • At the time of selling the plot, your wife should not own more than one residential house property (excluding the new one).

  5. Non-Transfer of New Property:

    • Do not transfer the new property within 3 years of purchase/construction to avoid revocation of the exemption.

  6. Joint Ownership:

    • Your wife can purchase the new property in joint ownership with her husband.

Best regards,

For detailed, personalized advice, consider a phone consultancy.

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

Thank you.

Shubham Goyal

Shubham Goyal
CA, Delhi
269 Answers
4 Consultations

5.0 on 5.0

1. to enjoy benefit of paying no tax it is necessary to invest full amount in new flat . any  Proportioned investment will also changed amount of LTCG Exemption 

2. Yes you can do it . it depends upon case to case basis. 

Ketan Agarwal
CA, Mumbai
5 Answers

Not rated

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