| Question And Answer | |
|---|---|
| Subject: | Capital gain on sale of redevelopment property |
| Category: | Income-Tax |
| Querist: | S.Bapat |
| Answered by: | Law Intern |
| Tags: | redevelopment, section 54 deduction |
| Date: | July 26, 2026 |
After his death,my father’s residential property (a flat purchased by him in 1975) was transferred in the names of my mother,me and my 3 sisters.For the purpose of redevelopment,the flat was surrendered to a developer in January 2023. He agreed to give 2 flats in exchange. Now, in July 2026, the developer is getting completion certificate and eventually, he will give us the possession of 2 flats in August 2026.Now, the question is , if we all (mother and all 4 daughters) sell the flats immediately after possession, can we claim for long term capital gain,and claim exemption under section 54 ?
No. The old flat was a long-term capital asset. There was LTCG on its gain which was set-off by the exemption u/s 54 granted for the construction of the new flat. The new flat is a short-term capital gain and is not entitled to any exemption.