According to personal finance expert Balwant Jain, when acquiring a residential house in India jointly with another person, each joint holder is eligible to claim the Section 54F exemption based on their respective cost contribution ratio. The exemption applies to the ratio in which the cost of the residential house property is met by each joint holder respectively. As reported by The Economic Times, while computing the respective share of joint owners in the cost of the house, their share in the home loan shall also be taken into account. In case the other joint holder has not contributed anything but has only been added for succession purpose, whole of the capital gains will be taxed in the hands of the contributing joint owner.
The exemption is available even if the same money realised from selling shares is not directly invested in the house purchase. According to The Economic Times, what matters is that the net sale proceeds from the capital asset sale are invested in acquiring the residential house within the prescribed time period. The latest tax rules also specify that a taxpayer has an option to make investment in two residential house properties in India, which can be exercised only once in his lifetime provided the amount of long-term capital gain does not exceed ₹2 crores. Additionally, alternatively, you can invest the capital gains in capital gains bonds of specified financial institutions within six months from the date of sale of the flat.
The Section 54F exemption is available only if the taxpayer does not own more than one residential house property on the date of sale of the capital asset. As reported by The Economic Times, the exemption claimed earlier will get reversed if the taxpayer acquires another residential house within two years or constructs a new house within three years from the date of acquisition of the house in respect of which the exemption is claimed earlier. The latest tax framework also includes specific limits on long-term capital gains arising from transfer of residential house property, which shall be invested in two residential house properties in India.
For jointly owned properties purchased before July 23, 2024, taxpayers have two options to calculate long-term capital gains tax. According to The Economic Times, you can either pay tax at 12.50% on the difference between sale price and cost of the flat, or pay tax at 20% on the difference between sale price and indexed long-term capital gains. In the case of a flat purchased for ₹21 lakh in June 2011 and sold for ₹43 lakh in December 2025, the brokerage paid at purchase is included in the cost, while brokerage at sale is deducted from the sale price. Under the first option, tax at 12.50% applies to ₹22 lakh of long-term capital gains, resulting in ₹2,75,000 tax liability. Under the second option, with indexed cost of ₹42.91 lakh based on Cost Inflation Index of 184 for 2011-2012 and 376 for financial year 2025-2026, the indexed long-term capital gains come to only ₹9,000, resulting in ₹1,800 tax liability at 20%.
