Homeowners May Benefit from Dual Eligibility for Tax Relief under Sections 54 and 54F

Tax Exemption for Long-Term Capital Gains on Under-Construction Property

Company/Section: N/A Date: February 2026 Industry: Personal Finance

Summary

An individual sold their residential property in May 2024 and booked an under-construction flat with an allotment letter dated March 2025. The long-term capital gain from the sale of the residential property was Rs 33.23 lakh. The individual has already claimed exemption under Section 54 for the FY 2024-25. They have made substantial payments towards the under-construction property using funds from redeemed investments and sold listed shares, resulting in long-term capital gains.

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Expert's Advice

Income tax laws allow an individual to claim exemption from long-term capital gains if investment is made in a residential house property under Section 54 and Section 54F within a prescribed time period. Booking an under-construction house property is treated as self-construction for this purpose.

Eligibility Criteria

• The individual must not own more than one residential house on the date of sale of the asset giving rise to long-term capital gains.
• The construction of the house should be completed within three years from the date of sale of the asset.

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Claiming Exemption

Claiming exemption under one section does not bar exemption under another section for the same property. The individual can claim exemption under Section 54F for long-term capital gains arising on sale of investments on the same property on which they have already claimed exemption under Section 54 in the earlier year. There is no special procedure required to be followed for claiming this exemption, and it must be claimed while filing ITR for the respective years.