Positive impactCorporate Action
Buying two flats and joining them? ITAT ruling clarifies when you can claim capital gains tax exemption
Mint 1 hr ago·24 Oct 2026, 2:01 pm
The Income Tax Appellate Tribunal (ITAT) has clarified a key rule for homebuyers. It ruled that if you buy two adjoining flats and join them to form a single home, you can claim tax exemption under Section 54F. This exemption applies to long-term capital gains from the sale of property, provided the new home is used for residential purposes.
This ruling is significant because it expands the definition of a 'single residential house.' Previously, investors were often unsure if buying multiple units to create a larger home would disqualify them from tax benefits. The ITAT's decision confirms that physical connection and usage as one unit are the deciding factors.
Investors should be aware that while the ITAT has ruled in favor of this interpretation, the Income Tax Department may still verify the details. Taxpayers planning to combine properties should ensure proper documentation exists to support the claim that the flats are used as a single residence.
Excerpt from Mint
The ITAT has ruled that two adjoining flats may qualify as one residential house for Section 54F capital gains tax exemption if they are physically connected and used as a single home. The benefit remains subject to verification by the Income Tax Department. Homebuyers who reinvest capital gains in two adjoining flats…Read the original at Mint
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