Tax relief u/s 54F for second house

Dear Sir,

I own  and live  in self occupied house.

I purchased  land in the year 2002 and invested entire CAPITAL  Gains in construction of second new house  in my name in the year 2006 which is still owned by me and not sold or let out.

Please guide me if my case entitles for exemption under Section 54F  of Income Tax Act .

Can I avail Tax Relief u/s 54F  as I have invested whole amount  in construction of second house .

Just browsing for help guidance on internet I came across your article and E Mail contact, so am writing to seek your expertise advise on the matter

Kind Regards
Asked 3 years ago in Income Tax from Hyderabad, Telangana
Sec 54F is applicable on capital gain on long term on transfer of asset ,other than a residential house.
If you have sale any aforesaid capital asset , the gain arising from transfer , need not to pay tax on it provided that.
If you have purchased a residential house  one year before or two year after the transfer. Or constructed a house with in 3 year after construction..
Please note that there is 3 year lock in period for the same.

In our case.. I believe there is no sale of long term asset capital gain, therefore 54f not applicable.. or provide the details of any transfer has been done..

Hope this will serve your purpose.
Incase you need further assistance
 please contact
Deepak Rathore
CA, New Delhi
23 Answers
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  Talk to Deepak Rathore
Exemption u/s 54F is not available in respect of transfer of a long term asset, which is not a residential house. Hence, in your case, you cannot avail the benefit u/s 54F, as your house is a residential house.

In your case, you can explore the exemption u/s 54 or 54EC, subject to fulfillment of conditions specified therein.
B Vijaya Kumar
CA, Hyderabad
824 Answers
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Sir first of all you can avail of tax relief U/s.54F. But in your case you have not specified when you have sold the land on which capital gain was arrived.

Also you have invested in 2006. May I know which is the year in which you need guidance as 2006 income tax returns cannot be filed now.

Kindly be more specific to guide you better.

Shyam Sunder Modani
CA, Hyderabad
1409 Answers
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  Talk to Shyam Sunder Modani
Dear Tax Payer,

It is not very clear that which asset was being sold. Is it Land or your self occupied house?

While the capital gain out of sale of land which is reinvested in a residential house property is covered under the provision of Section 54 of the Income-tax Act, 1961, capital gain out of sale of self occupied house which is reinvested in an another  residential house property is covered under the provisions of Section 54F of the Income-tax Act, 1961.

Step to decide taxability
1. Decide whether Section 54/54F is applicable based on the above provision.
2. Determine whether the conditions laid down in those particular sections have been fulfilled.
3. Determine the tax liability.

Provisions are different for Section 54 and 54F. Hence, due to lack of clarity in the query, leaving the answer with procedure.

CA. Rajeev P T
Rajan Chakravarthy & Associates, Chennai

*****This Opinion is based on stated facts and the legal position as on date. The views expressed may not be relevant where there is any change in facts or law. This Opinion is not in the nature of an assurance that an alternative view or interpretation cannot emerge.
Rajeev P T
CA, Chennai
40 Answers
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