Section 54 — reinvest your house-sale gain and pay ₹0 capital-gains tax

What's taxable first

Held the house more than 24 months? The profit is a long-term capital gain (LTCG), taxed at 12.5% without indexation (or 20% with indexation if bought before 23 July 2024 — whichever is lower).

The Section 54 exemption

• Reinvest the capital gain in another residential house — buy 1 year before or 2 years after the sale, or construct within 3 years.
• The gain is exempt to the extent reinvested (up to a ₹10 crore cap).
• Can't reinvest before your ITR due date? Park it in a Capital Gains Account Scheme (CGAS) to keep the exemption alive.

Worked example — ₹60 lakh gain → ₹0 tax

Watch out

The new house can't be sold for 3 years or the exemption reverses. Section 54 allows only one new house (except a once-in-a-lifetime option for two houses if the gain is ≤ ₹2 crore).