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  5. Can you claim exemption under Section 54 and 54F on LTCG from sale of multiple houses and shares?

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Can you claim exemption under Section 54 and 54F on LTCG from sale of multiple houses and shares?

balwant jain
By Balwant Jain

4 min read | Updated on April 20, 2026, 15:25 IST

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SUMMARY

Learn whether exemption under Section 54 and 54F is available on long-term capital gains from sale of residential flats and shares when a new house is already purchased, with clear tax implications explained.

Can you claim exemption under Section 54 and 54F on LTCG from sale of multiple houses and shares?

The exemption under Section 54 is available if the LTCG arising from the sale of more than one residential house property is invested in a single house property, provided the investment is made within the prescribed time period. | Image: Shutterstock.

An individual owns three flats purchased about 15 years back and is considering the tax implications of the sale of two residential properties along with shares, while having already invested in a new residential house.

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The issue relates to the eligibility for exemption under Sections 54 and 54F of the Income-tax Act, 1961. Today's Q&A explains such details in response to a query by a reader.

Question: I own 3 flats bought 15 years back. One flat is sold on 12-02-2026. The deal for the second flat has already been agreed upon, but the agreement for the sale of the second flat will be executed by 30-05-2026. The aggregate sale consideration for both flats is ₹85 lakh. The plain capital gain is ₹74.40 lakh for both the flats taken together. I have also sold some shares on 01-08-2025 for ₹65 lakh. I have already bought a flat in Hyderabad on 11-08-2025 for ₹1.22 crore. Can I claim long-term capital gains exemption under Section 54 and Section 54F both for my long-term capital gains (LTCG) on the sale of two houses and shares?
Answer: Section 54 and Section 54F of the Income Tax Act grant exemption to individuals and an HUF from Long Term Capital Gains (LTCG) if investment is made in a residential house. Section 54 applies to long-term capital gains arising from the sale of a residential house property, where the exemption is available up to the amount of LTCG utilised. Section 54F applies for LTCG arising from the sale of a capital asset other than a residential house property if you utilise the net sale consideration for acquiring a residential house. The amount of exemption comes down proportionately under Section 54F if the whole of the net sale consideration is not invested.

There are no restrictions on the number of houses which you can own on the date of sale of the residential house to be eligible to claim exemption under Section 54, but exemption under Section 54F is available only if you do not own more than one residential house on the sale of the capital assets, except the house with respect to which the exemption is being claimed.

The prescribed time period within which you have to acquire the residential house is the same under both sections. If you are going for a ready-to-move-in residential house, the same has to be bought within two years from the date of sale of the asset, but a longer period of three years is available if you go for self-construction of the house or book an under-construction house within which the construction needs to get completed. If a residential house property is bought within one year before the sale of the capital asset, the exemption under both sections is still available.

Since you own more than one residential house property on the date of sale of shares, you cannot avail the exemption under Section 54F on LTCG arising from the sale of shares.

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As far as the exemption under Section 54 is concerned for the flat purchased in Hyderabad on 11-08-2025 for ₹1.22 crores, the same is available for the first flat sold on 12-02-2026, as the flat has been bought within the prescribed time frame of two years. The exemption for LTCG on the second flat, which you plan to sell next year, will also be available, as the flat is planned to be sold by 30-05-2026, which is well within the period of one year from the date of purchase of the flat at Hyderabad. In order to ensure that you do not miss the exemption on sale of the second house, you need to sell the same before 11th August 2026.

The exemption under Section 54 is available if the LTCG arising from the sale of more than one residential house property is invested in a single house property, provided the investment is made within the prescribed time period. Since the cost of the Hyderabad flat is more than the combined plain LTCG of both the flats and since both the sales are happening within the prescribed time period, you will be able to claim full exemption in the respective year of sale of the flats.

Have a personal finance, mutual fund, or income tax query? We will try to get them answered by experts. Write to sangeeta.ojha@rksv.in
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Disclaimer: The views and opinions expressed above are those of respective experts/commentators and do not reflect the views of Upstox. The above Q&A is only for informational purposes and should not be considered investment or tax advice from Upstox. Please consult a tax expert for your complex tax problems.

About The Author

balwant jain
Balwant Jain is a Mumbai-based tax and investment expert.

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