Hey @sks17279
Under Section 54F, you can claim capital gains exemption by purchasing a residential property within 1 year before or 2 years after the transfer of a long-term capital asset.
Therefore, you can claim exemption if the property purchased in FY 2022-23 falls within one year from the date of transfer. Additionally, if the property is co-owned, you can claim the exemption for the amounts you have paid.
Hope this helps!
Thank you Jayni for your response.
To clarify further, does the 1 year before date of transfer mean exactly 365 days OR is it just the FY which needs to be 1 year before?
In my case, FY22-23 was when I bought the property and FY23-24 is when I have made the LTCG over multiple transactions of shares & mutual funds which I want to avail the exemption for, and I guess I may not be meeting the 365 days if that is what needs to be referred to.
Hey @sks17279
According to Section 54F, the one-year period is precisely defined as 365 days. Therefore, any transactions conducted within 365 days from the date of the property purchase will qualify for exemption claims.
Hope this helps!
2 posts were merged into an existing topic: Set off and carry forward of losses
Hello Tax experts,
My query is related to the interplay of Advance Tax, Long Term Capital Gains and Section 54F exemption for some recent financial transactions.
I sold shares in Jan 2024 and earned Long Term Capital Gains > Rs. 1 lakh. I plan to invest the entire sale proceeds in a residential property to avail LTCG tax exemption under Sec 54F.
My property purchase/agreement would happen after 31st July 2024 i.e. I use Section 54F exemption after 31st July 2024 within the 2 year window of LTCG earned for ready-to-move property.
So, the timeline is like below-
a. Jan 01 2024 - Sold shares, LTCG > Rs. 1 lakh
b. By July 31 2024 - Property not finalized so deposited full sale proceeds into CGAS scheme
c. After July 31 2024 and before Jan 01 2026 - Property purchased under Sec 54F. Sec 54F exemption claimed in corresponding FY
So, do i need to pay advance tax for FY23-24 on the LTCG ( @ 10% of LTCG) by Mar 15 2024 to avoid interest/penalty under Sec 234A/B/C?
If I have to pay advance tax on the LTCG by Mar 2024, it means that i have effectively paid the LTCG tax to IT dept, and in future I’ll have to seek refund of it when I apply for Sec 54F exemption. Is this understanding correct? If not, please correct me.
If i skip paying advance tax by Mar 2024 and deposit entire sale proceeds into Capital Gains Account Scheme (CGAS) by 31 July 2024, will i still be charged interest/penalty under Sec 234A/B/C?
Any other ways by which I can eliminate the need to pay taxes upfront/block my money whether in form of Advance tax, CGAS deposits, Sec 54F exemption etc.
Requesting genuine advice from the experts on this forum and thanking them in advance for their valuable time and advice.
Hey @jayhg00,
You do not have to pay advance taxes on the long-term capital gains if you are claiming exemption u/s 54F. Moreover, as this amount will not be included in your total income, there will be no interest penalties on the same.
Hope this helps!
Hello.
I want to know if I invest the LTCG gains from eqity into Gov Securites then can I claim exemption under 54F along with the 1L already exempted. If not 54F then any other section. I do not want to invest in property right now.
Thanking you
taprico
Hello Experts,
I have sold shares in FY 23-24 with considerable Long Term Capital Gains and at this point in time, I do not plan to invest the sale proceeds into residential property to avail Sec 54F exemption on the LTCG (assuming I meet all other criteria to satisfy Sec 54F exemption). So, I pay the LTCG tax @ 10% of the LTCG.
Now, within 2 years after the sale of the shares, I change my mind to purchase a residential property of value which is more than the sale proceeds of the shares. In that case, can I avail Sec 54F exemption (again assuming I meet all other criteria to satisfy Sec 54F exemption) in that future FY and get refund of the LTCG tax that I have paid in this year? If possible, how is it to be shown in the ITR filing ?
Thank you in advance.
Hey @jayhg00,
No, you will not be able to claim a refund in such a case.
However, if you are unsure of investing in a house property, you can deposit the money in CGAS and claim the 54F exemption. However, if the amount is unutilised for 2 years, it shall become taxable in that AY.
Hello! Could you please help with a clarification on the following case -
The seller has 2 residential houses in her name and 1 residential plot.
She intends to transfer 1 of the houses through gift/settlement to her child and also sell the plot.
The proceeds from the sale of the plot will be parked in a capital gains account and the funds will be entirely used to buy an apartment from a developer. The agreement to sale has been signed with the developer and the apartment will be completed in 3 years’ time.
Please clarify if she must transfer the house to her child before the sale of the plot or if she has time until she signs sale deed/registration for the new apartment. Thank you.
Hello Experts,
I have query about availing the exemption under Section 54F this year. Here is my case - it’s about joint ownership.
Now I have purchased a flat in my name (wife 2nd name / co-owner) in the current financial year. And incidentally, this year, I also have certain long term capital gains arising from sale of Shares. Since I had only 1 residential flat where I was the first owner (#1 above), am I eligible to claim 54F exemption for the flat bought this year?
Thanks in advance.
Hey @Atul_Puri,
Co-ownership is considered when claiming exemptions like 54F. As you are already a co-ower of 3 residential properties, you would not be able to claim the 54F exemption.
Hope this clarifies!
I sold some shares and made some LTCG in F.Y. 2023-24. Now I am planning to purchase a flat. Given its already the end of the financial year, I will probably buy the flat in Q1 of F.Y. 2024-25.
Can you please let me know, if I will get any tax benefit for the sale of shares in F.Y. 2023-24 against purchase of property in the next F.Y.
If I again sell some share in F.Y. 24-25 for this purpose (buying of flat) will I get any tax benefit (say I have 25L LTCG in 23-24 and 25L LTCG in 24-25).
Also I am co-owner of 2 flats which I inherited (50% ownership in each, along with my brother). Can this be an obstacle. Given the share is 50% can I treat it as one flat?
Any input will be appreciated.
Hey @joy,
The exemption can be claimed on property purchases within 2 years from the date of sale of the capital asset.
You just need to deposit the amount in a CGAS account to claim the exemption while filing the ITR. Moreover, you can claim the exemption on the LTCG accrued in FY24-25 as well as long as the gains are invested in the same house property.
However, the condition is that you should not own more than one house property and since you are already a co-owner of 2 house properties, the exemption will not be available.
@Surbhi_Pal Thanks for the detailed explanation. Much appreciated.
hi, @Shrutika_Shah
can you claim exemption for 2 financial year capital gain to buy house?
can you also add parents as co-owner for purchase of house
Hey @Gaurav_Sanghavi,
Yes, if the amount is used to purchase a single house property, you can claim the exemption.
Moreover, you can deposit the amount in CGAS account until you invest it in a house property.
Your parents can be a co-owner in the property.
Hope this clarifies!
@Surbhi_Pal thanks, how period would be computed, i suppose it would be from 1st financial year, if you are combining capital gain of 2 financial year to purchase single house property.
If you dont purchase house in 2years, in which year, capital gain will be taxed, in period of income or last financial year.
Hey @Gaurav_Sanghavi,
You will be required to purchase the new house property within 2 years of selling the long-term assets and this period will be calculated from the day such assets are sold.
If the house property is not purchased within 2 years, the capital gains will become taxable in that FY.
thanks @Surbhi_Pal, if capital gain is booked in FY24 and if house is not purchased till FY26, capital gain will be added in FY26 income and taxed?
How many time you can claim deduction under 54F for purchasing house, total limit is 10 crs, can it be used multiple time within 10 crs limit