I sold some shares this year, resulting in Long Term Capital Gains (LTCG), and immediately used the proceeds to purchase a residential flat (Flat A) in June 2024 to claim an exemption under Section 54F. Later, I sold another residential flat before July 23, 2024 (not Flat A) and plan to claim an exemption under Section 54 by investing the indexed LTCG in another residential flat (Flat B). Can I claim exemptions under both Sections 54 and 54F in the same financial year?
According to the provisions of Section 54F, an individual or Hindu Undivided Family (HUF) can claim an exemption if a residential house is purchased within two years from the date of sale of long-term capital assets, provided they do not own more than one house at the time of the sale. In your case, you meet these conditions and can claim an exemption under Section 54F for Flat A.
Section 54 allows an exemption for long-term capital gains on the sale of a residential house, provided the gains are reinvested in another residential house within the prescribed period. There is no explicit prohibition against claiming exemptions under both Sections 54 and 54F in the same financial year. However, Section 54F specifies that the exemption is not available if the taxpayer purchases another residential house within one year from the date of the sale of the asset for which the exemption under Section 54F is being claimed.
Since you are buying Flat B within one year of the sale of shares, you cannot claim an exemption under Section 54F for Flat A. If the order of transactions had been reversed and you had purchased Flat B before selling the shares, you could have claimed exemptions under both sections within the same financial year.
To maximize exemptions, you could have claimed under Section 54 for Flat A if it was purchased within one year before selling the residential house, and then claimed under Section 54F for Flat B, provided it met the criteria within the prescribed period. This approach would have allowed you to navigate the restriction of purchasing an additional residential house within one year of the sale of shares.
