Selling property often brings up questions on how to save tax on long-term capital gains. One such situation concerns whether the gains from selling two different residential units can be combined to buy a single property and still enjoy the exemption under Section 54 of the Income Tax Act.

The Case

A taxpayer constructed a stilt plus four-storey building and later sold two of the floors to different buyers. The proceeds from both sales were placed into separate Capital Gains Accounts with a public sector bank. The key question: can these amounts together be used to purchase one new house without losing the Section 54 benefit?

What the Law Provides

Section 54 gives relief from long-term capital gains tax to an individual or Hindu Undivided Family (HUF) if the gains from selling a resid

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