Save Capital Gains Tax by Investing in an Under-Construction Property
Can You Avoid Capital Gains Tax? If you sell shares and mutual funds worth Rs 60 lakh, you can save tax by reinvesting in an under-construction residential project.
Eligibility for Tax Exemption
- Under Section 54F, you must invest the entire sale amount in a new residential property.
- The property must be purchased within two years or constructed within three years.
- The exemption is proportionate if the entire amount is not invested.
Joint Purchase With Spouse
- If the property is jointly purchased, both can claim tax exemption.
- Exemption is based on each person’s contribution to the purchase.
| Criteria | Requirement |
|---|---|
| Holding Period | More than 12 months (LTCG) |
| Investment Deadline | Within 2-3 years |
| Eligible Property | Residential only |
| Section | 54F |
Key Takeaways
- Reinvest full sale proceeds to avoid LTCG tax.
- The project should be completed within three years.
- Keep all payment proofs for claiming exemption.
Did You Know? A taxpayer can deposit the capital gains in a Capital Gains Account Scheme (CGAS) if the purchase is delayed beyond the tax filing deadline!
