Long term capital gain exemption u/s 54 of I.T.Act

[SANJAY BAHETI]

Dear Experts,

One of My client being an Individual Lady has purchased a Residential House property (i.e. Tenament) in her name in the Year 2005. Now She wants to sell/dispose the said House in the Current F.Y. & whatever the long perm capital gain arises therefrom is likely to be fully utilized towards purchase of New Residential Bungalow in joint name with her husband.

Now query is whether she can claim the said long term capital gain as exempted u/s 54 of IT Act even though the new house property will be in joint name with her husband by investing equally amount either fully or proportionately. 

[sanjeev bajaj]

Yes, the benefit can be claimed u/s 54 even though bought jointly but ehe amount of capital gain must be invested.

 

AI Summary

Long Term Capital Gain Exemption applies when the capital gain amount is reinvested in a residential property held jointly. Long term capital gain from sale of a residential house is exempt where the taxpayer reinvests the capital gain amount in a new residential property; acquiring the new property in joint names with the spouse does not bar the exemption provided the capital gain amount is actually invested in the acquisition.