Is exemption allowed if I construct above my existing house

When you sell the land/plot, you can claim exemption u/s 54F only by investing the sale proceeds in the construction of a new house. The exemption is, however, not available, if "the assessee,—

(i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset;" as per the proviso to 54F(1).

As you are already having one one-floor residential house, you will not be entitled to claim exemption u/s 54F for the construction of your duplex house.

However, if your present one floor house is constructed within one year before the date of sale, then you can claim exemption for the existing house also.

Yes it will be exempted.

yes capital gain exemption is allowed

Hello,

Yes, capital gain will be exempted but be prepared to fight it out as the AO may consider it to be improvement on your existing house rather than a new house.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, FCA, LLB, CERT. FAFP

Hi,

The matter is litigative because many a times income tax officers tried to treat it as improvement in the existing house rather than construction of new house.

Please feel free to call/ revert in case you need more clarity

Thanks and regards

Abhishek Dugar

CA CS B.Com

Hi,

There is no straight jacket answer to your question as there are decisions in favour of the assess as well as the department. The AO may consider it to be a new property altogether or an extention to the existing property.

Be prepared to fight it out in order to claim it as a new house property.

Trust this clarifies.

Regards,

Keerthiga Padmanabhan

M.Com., CA, LL.B