Capital Gain Arising From The Transfer Of Residential House Property – Sec. 54

Capital Gain Arising From The Transfer Of Residential House Property – Sec. 54 – Check the Table Below

NATURE Transfer of residential house, the income of which is chargeable under the head ‘income from house property’
PERIOD HELD BEFORE TRANSFER More than 36 months (Thus only Long Term)
AMOUNT EXEMPTION OF If capital gain < amount invested = full amount

If capital gain > amount invested = difference is taxable

In other words, capital gains shall be exempt to the extent it is invested in the purchase and/or construction of another house.

CONDITIONS The capital gains arising from such residential house property transferred is reinvestment in one residential house property in India

  • Purchased one year before transfer or
  • Purchased two years after transfer or
  • Constructed three years after transfer
  • House property cannot be transferred for three years after acquisition or construction
IF AMOUNT NOT UTILIZED TILL FILING OF RETURN U/S 139(1) Deposit in Nationalized bank under the capital Gains Deposit A/c scheme.
IF DEPOSIT NOT UTILISED Unutilized amount taxable as LTCG in the previous year in which three years from the date of transfer of original asset expires.
CONSEQUECES OF TRANSFER BEFORE THREE YEARS The cost of new asset shall be reduced by the amount of capital gains exempted earlier. Therefore amount of Capital gain on sale of new property and capital gains exempted earlier chargeable to tax in the year of sale of house property.

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