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Can you claim Section 54 tax exemption for buying two residential flats? Here's what the ITAT ruling says
Mint 1d ago·29 Aug 2026, 1:43 pm
The Mumbai ITAT has clarified a complex tax rule for property sellers. The Tribunal ruled that if two flats are amalgamated into a single property, the tax exemption under Section 54 applies as if it were one house. This distinction is crucial because the tax code generally treats the purchase of two separate properties as a capital gain, which is fully taxable unless specific conditions are met. The ruling helps taxpayers understand that the legal structure of the property matters more than the number of units.
This clarification is significant for investors as it provides a clearer path to tax deferral. By amalgamating adjacent flats, a seller can potentially preserve the capital gains tax exemption, allowing the invested amount to grow tax-free. Investors should watch for further judicial interpretations and potential legislative changes that could impact this specific exemption rule.
Excerpt from Mint
A Mumbai ITAT ruling has clarified how Section 54 applies when taxpayers invest in two adjacent flats. The Tribunal’s finding on their amalgamation could offer an important distinction from the rule governing investment in two separate residential houses. Can you claim tax exemption under Section 54 if the investment…Read the original at Mint
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