In continuation of –Invest in House Property To Save Taxes on Capital Gains- Part I, request you to please read on for more on this subject.

If one co-owner purchases the share of the other co-owner in the property, can he claim the exemption?

Where a property is owned by more than one person, and one co-owner purchase the respective share of other co-owner, it can be said that the property has been purchased.

Can exemption is available for investing in the construction of a new floor on an existing house?

If the amount of capital gain is invested in the construction of new floor on another house owned by him, he will be entitled to get exemption for the same.

Can an assessee own more than one residential house?

For claiming exemption u/s 54F, the law specifically prohibits the purchase or construction of more than one house. If the assessee has already one residential house he is not entitled to exemption of capital gain tax, when he invests such amount in purchase of additional residential house.

Can exemption be claimed by legal heir in event of the death of the assessee?

If the required conditions are satisfied by the legal representative, benefit of exemption is available to legal heir.
Can exemption be claimed if the assessee acquired property in the name of his wife instead of acquiring in his own name?
Where an assessee sold the property owned by him and purchased another property in the name of his wife, exemption shall be allowable.
Can exemption be claimed by acquiring a residential house outside India?
Where non-resident Indian sold a house in India and purchased residential property in foreign country, he will be entitled to claim deduction.

Can assessee claim exemption by investing the long term capital gain both for purchase and construction of residential house property?
Where the assessee had partly invested the capital gain on purchase of another house property and partly on the construction of additional floor to the house so purchased within the prescribed time limit, the exemption can be claimed either for purchase or for construction not for both.
Is it necessary to get the physical possession /ownership of the property within 2 year of transfer?
When an assessee entered into a memorandum of understanding with the buyer of the property and transfers a substantial part of the total consideration is allowed for exemption. Transfer of property or ownership has nothing to do with the case as long as the sum of capital gain transferred fulfils the condition of section 54.

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