Search Results For: 54

I borrowed funds to buy a new house u/s 54. Will the s. 54 exemption be denied to me?

QUERY: I sold my residential property and made a long-term capital gain of Rs. 50 lakhs. I used the sale proceeds to purchase a commercial gala. Subsequently, within two years of sale of the residential property, I purchased another residential property by borrowing funds from the bank and relatives. Can I claim that the long-term capital gain is exempt u/s 54 even though the sale proceeds of the old house were not used for purchase of the new house?
ANSWER: Click here to read the full answer of the expert

No! The only requirement for availing deduction u/s 54 is that the new residential house must be purchased or constructed within the period specified in the section. The source of funds is irrelevant.

Posted in Income-tax