Section 54 of the Income tax deals with the exemption of Long Term Capital Gains on sale of House Property. As per this section, there is no restriction that you should own only one house property to claim the exemption. Hence you can claim exemption from Long Term Capital gain on sale of House property by investing the same in new house property within stipulated time.
Kindly ensure the following to claim the exemption :-
1) The Property you are selling is a Long term Capital Asset. (ie.,) It should have been purchased more than 36 months ago
2) You have to purchase (or) Construct a new (Only one) Residential House Property within 2 years (in case of purchase) / within 3 years (in case of constrcution)
3) The house property so purchased or constructed should not be sold/transferred within a period of 3 years from the date of purchase or construction.
4) If you decide to purchase/construct house property and could not do so before the due date of filing the Return of Income, you should open a deposit account wth a bank under Capital Gain Account Scheme. The withdrawls from this account should be used only for Purchase/Construction of House property within the stipulated time limit.
Kindly revert back in case of further queries
Thanks & regards
- CA B S Sridhar