Taxpayer should not own more than one residential house on the date of sale, other than the one bought for claiming exemption under this section.

you cannot claim for 3 residential properties 

3) Only one house property can be purchased or constructed. The exemption for 2 properties for capital gains up to Rs 2 crore is only once in a lifetime benefit under Section 54.

You cannot claim benefit 

Dear Client,

Yes, you can claim the capital gains exemption under Section 54 of the Income Tax Act, 1961, even if you already own multiple residential properties. The exemption applies when you sell a residential property and reinvest the capital gains in a new residential property within the stipulated time. The law does not restrict the number of properties you can own before or after the transaction. However, if you choose to invest in two residential properties, the exemption is capped at ₹2 crores and can only be availed once in a lifetime.

Section 54 of the Income Tax Act provides exemption on long term capital gains from the sale of residential property if the proceeds from such sale are reinvested in purchasing or constructing another residential property within a specified time frame. 

The conditions that need to be satisfied to avail the benefit of the said section are as follows:

• Asset must be classified as a long-term capital asset.
• The asset sold is a Residential House. Income from such a house should be chargeable as Income from House Property
• The seller should purchase a residential house either 1 year before the date of sale/transfer or 2 years after the date of sale/transfer. In case the seller is constructing a house, the seller has an extended time, ie. the seller will have to construct the residential house within 3 years from the date of sale/transfer. 
• The new residential house should be in India. The seller cannot buy or purchase a residential house abroad and claim the exemption.
• From 1st April 2023 the capital gains tax exemption under Section 54 to 54F will be restricted to Rs.10 crore. Earlier, there was no threshold.
• The above conditions are cumulative. Hence, even if one condition is not fulfilled, then the seller cannot avail the benefit of the exemption under Section 54. 

With effect from Assessment Year 2020-21 corresponding to FY 2019-20, a capital gain exemption is available for purchase of two residential houses in India. However, the exemption is subject to the capital gain not exceeding Rs 2 crore. Also, the exemption is available only once in the lifetime of the seller.

f the new house is sold within 3 years from the date of purchase or construction,  then the exemption claimed earlier under section 54 shall be indirectly taxable in the year of sale of the new house property. Let’s consider two scenarios when the new house is sold within 3 years from the date of purchase or construction:

Case example: Cost of the new house purchased is less than the capital gains computed on the sale of the original house.

Generally, when a house is sold, the profit is considered as capital gains. However, when the new house is sold within 3 years from the date of purchase or construction, then the cost of acquisition will be considered as Nil. Hence, there will be an indirect increase in taxable capital gains

f the new house is sold within 3 years from the date of purchase or construction,  then the exemption claimed earlier under section 54 shall be indirectly taxable in the year of sale of the new house property. Let’s consider two scenarios when the new house is sold within 3 years from the date of purchase or construction:

Case example: Cost of the new house purchased is less than the capital gains computed on the sale of the original house.

Generally, when a house is sold, the profit is considered as capital gains. However, when the new house is sold within 3 years from the date of purchase or construction, then the cost of acquisition will be considered as Nil. Hence, there will be an indirect increase in taxable capital gains

Under Section 54 the IncomeTax Act, an individual or HUF selling a residential property can avail tax exemptions from Capital Gains if the capital gains are invested in purchase or construction of residential property. 

2) capital gain exemption is available for purchase of two residential houses in India. However, the exemption is subject to the capital gain not exceeding Rs 2 crore. Also, the exemption is available only once in the lifetime of the seller.

Individuals or Hindu Undivided Families (HUFs) in India qualify for the Section 54 exemption if they sell a residential property and reinvest the proceeds in another residential property. The property sold must be a long-term capital asset, specifically a residential house.

Section 54F of the Income Tax Act 1961 provides an exemption from long-term capital gains tax on selling any capital asset other than a residential property. This means that if you sell a long-term capital asset like shares, stocks, bonds, gold, etc., and reinvest the sale proceeds in a new residential property within a specified timeframe, you can claim an exemption on the capital gains arising from the sale.

There is also no specific bar either u/s 54 and 54F or any other provision of the Act prohibiting allowance of exemption under both the sections in case the conditions of the provisions are fulfilled

As per provisions under section 54EC of Income Tax Act, 1961, any long term capital gains arising from transfer of any capital asset would be exempted from tax if: The asset being sold is a Long Term Capital Asset, which includes land or building or both.

you can claim both exemptions under Section 54EC for land or building and under Section 54F if it's not a residential house. To qualify, you must meet the conditions specified in each section.

Dear Client,

Under Section 54 of the Income Tax Act, 1961, you can claim an exemption on the capital gains from the sale of a residential property if you invest the proceeds in purchasing or constructing a new residential property, regardless of the number of properties you already own. There is no restriction on owning multiple properties before or after the transaction. You can claim this exemption if you use the capital gains to buy or construct a new residential property within the specified time frame, either within one year before or two years after the sale, or by constructing within three years from the sale date. Since you have never claimed this exemption before, you are eligible to claim it now, provided you meet all the necessary conditions and maintain the relevant documentation.

- Under the Income Tax Act, property is regarded as a capital asset and any gains arising from its sale is taxable as Capital Gains.

- Further, if the property is held for less than three years prior to its sale, it is termed as a short-term capital asset and any gain arising from the sale is treated as a short-term capital gain.

- Further, if the property is sold after a holding period of more than three years, it is to be treated as a long-term capital asset and a gain arising from its sale is assessed as long-term capital gains

- Further as per Section 54EC of the IT Act, any capital gains arising from the transfer of a long-term capital property/asset would be exempt if the gains are invested within a period of six months in specified investments, and these investments are three-year bonds of National Highway Authority of India (NHAI) or Rural Electrification Corporation

- Further, as per Section 54 & 54 F  of the Income Tax Act, you can re-invest the long term capital gains amount in residential house property and claim an exemption therein.

- Further , no tax shall be paid , if you use the entire gain to buy another house within 2 years from the selling of your old property .