What if to avail relief under sec 54, an assessee wants to purchase a vacant plot and then constructing a residential house in the same plot, will it be allowed as per relevent provisions of Sec 54. What shall be the timeline to start the construction of house?
Following conditions should be satisfied to claim the benefit of section 54.
The benefit of section 54 is available only to an individual or HUF.
The asset transferred should be a long-term capital asset, being a residential house
Within a period of one year before or two years after the date of transfer of old house, the taxpayer should acquire another residential house or should construct a residential house within a period of three years from the date of transfer of the old In case of compulsory acquisition the period of acquisition or construction will be determined from the date of receipt of compensation (whether original or additional).
With effect from assessment year 2015-16 exemption can be claimed only in respect of one residential house property purchased/constructed in India. If more than one house is purchased or constructed, then exemption under section 54 will be available in respect of one house only. No exemption can be claimed in respect of house purchased outside India.