Hello, please help clarify my doubt for section 54f and best way to handle the scenario,
I currently have one residential property (100% share) and I hold 10% share in another residential property. I want to sell some shares/MFs (long term capital gain) and buy another house. Now considering that I hold more than 1 property (1.1 property as of now), I become ineligible for relief under the section, is that understanding correct? If yes, the only way to be eligible tonhet relief is to first sell that 10% share in the house first, then sell the shares and buy the new house, correct?
Please assist.
No, you are not ineligible for holding 10% share in another property.
It is held by the ITAT Mumbai in the case of Smt. Tejal Kaushal Shah v Income Tax Officer that there is no restriction on the assessee to claim deduction under this provision whether as a co-owner of one or more residential properties.
For details , read full article :- Tax Implications on Sale of Jointly Held Properties
https://taxguru.in/income-tax/tax-implications-sale-jointly-held-properties
published on 5th July 2025.
Thanks for response, but it appears that my query is not clear to you. I dont intend to sell jointly held property, but sell stocks and MFs and claim LTCG relief for buying new property while holding 1 property and 10% share in second property.
Your query is clear to me . The same rule is applicable for claiming benefit under section 54F for second property jointly held by co-owners . You are not ineligible for deduction unless there is an absolute ownership of more than 1 property. There are n number of judgements availiable on this issue.
Thanks a lot for prompt response. So to recofirm even the co-owner, who holds this house (90% share) and one more house property (100%), so currently holding 1.9 houses can claim the exemption under 54f while buying another new house and will be holding 2.9 house property after the transaction.
Yes,
Madras High Court in the case of Dr. Smt. P.K. Vasanthi Rangarajan v COIT Chennai, held that
joint ownership of a property could not be held to stand in the way of claiming exemption under section 54F.
Read more at: https://taxguru.in/income-tax/capital-gain-exemption-aeabsolute-ownership-property.
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