Can I claim section 54 for a second house?
A taxpayer can claim the exemption for two residential houses once in a lifetime if the long-term gain does not exceed ₹2 crore. Otherwise the exemption is for one house. The conditions are strict, and we test them against your facts.
Does the new house have to be in India?
Yes. Both 54 and 54F require the new residential house to be situated in India. A house outside India does not qualify, however the purchase is financed. We confirm the location and title before the exemption is claimed.
Do I need to put the whole sale value or only the gain?
Under section 54, only the capital gain needs to be reinvested. Under 54F, the whole net sale consideration must be invested for a full exemption; if only part is invested, the exemption is proportionate. This is the single biggest difference between the two.
Can I sell the new house after one year?
If the new house is sold within three years of purchase, the earlier exemption is withdrawn and the cost of the new house is reduced by the exemption, which increases the gain on the sale. Holding for at least three years keeps the exemption safe.
What is the capital gains account scheme?
It is a special deposit account at an authorised bank in which you deposit the unutilised gain before the return due date. The deposit is treated as utilised for the exemption, and withdrawals are allowed only for buying or building the house. We guide you through account type A or B.
Are 54EC bonds tax-free?
The exemption applies to the gain, not to the bond interest. The interest is taxable each year, and the bonds cannot be sold or used as security for five years. The limit is ₹50 lakh in a year in total for bonds. Bonds suit people who do not want to buy another house.
Do I have to pay tax on capital gains even if I reinvest?
Not always. Sections 54, 54F and 54EC allow exemption from long-term capital gains when you reinvest in specified assets within fixed time limits. The exemption is conditional, so the reinvestment must match the section and the deadline. We check eligibility before you commit money, not after the return is filed.
Which ITR form is used when I have capital gains?
Most individuals with capital gains file ITR-2. If you also have business or professional income, it is ITR-3. ITR-1 is allowed only for long-term capital gains on listed shares or equity mutual funds under section 112A up to ₹1.25 lakh, and only when you have no other capital gains.
Is advance tax payable on capital gains?
Yes, once the gain arises. Advance tax is due on capital gains in the instalment period in which the sale happens, and any gain in the last instalment window can be paid by 15 March. Interest under section 234C is avoided if you pay in the remaining instalments after the gain arises.
