Question And Answer
Subject: Exemption of capital gain u/s.54F
Querist: Vikas Shah
Answered by:
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Date: December 29, 2022
Query asked by Vikas Shah

An assessee is owning old residential house and also plot of land.  Both the assets are long term capital assets.  Assesseee wants to sell plot of land and from the sale proceeds, assessee will demolish old residential house and wants to construct  new house.  Can assessee claim Long term capital gains exemption u/s. 54F  arisen from sale of plot against the construction of new house in place of old demolished house .

Also As the construction of new house will require handsome amount, Assessee’s Daughter in law which she is also having Plot of land will sell said plot and then afterwards Assessee  will demolish old house and thereafter will gift 50% share in plot of land (on which new house will be constructed) to her Daughter in law.  In such a case, can assessee and her daughter in law, both can claim the exemption of long term capital gain u/s 54F by constructing new house in their joint names by selling two different properties.

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As we understand, the assessee has a plot of land and an old residential property. Similarly, the assessee’s daughter in law also has a plot of land. Both will sell their plot of lands and invest in a new residential house property (i.e., demolishing the old residential property and constructing a new one). Both will be entitled to deduction under section 54F of the Income-tax Act, 1961 provided the other conditions are satisfied.

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