Income Tax Tribunal Approves Exemption for Two Flats Treated as a Single Home - Section 54F

By Sandeep Sadh
October 20, 2024

A recent ruling by the Income Tax Appellate Tribunal (ITAT) in Mumbai clarified how taxpayers can claim tax benefits when investing in two adjoining flats and using them as a single home. This decision could help many buyers, especially in cities like Mumbai where people often combine smaller flats into larger living spaces.

In this case, the taxpayer sold long-term assets and used the money to buy two neighboring flats in Mumbai. They claimed a tax deduction under Section 54-F of the Income Tax Act, which allows tax exemption on capital gains if the money is invested in a single residential property. The Income Tax Department argued that because the taxpayer bought the two flats through separate agreements, it didn’t count as a single house.

However, the ITAT ruled that the two flats were indeed used as a single home, and therefore, the tax benefits under Section 54-F should apply. The tribunal pointed out that the building plan, which combined the two flats into one unit, was approved by the Maharashtra Housing and Area Development Authority (MHADA) and was not disputed by the tax authorities.

This ruling is important for people looking to buy and combine adjoining flats. It shows that as long as the flats are used as one home, buyers can still qualify for tax exemptions on their investment.

Tax experts do advise being careful, as each case is different. In some situations, authorities may need to check if the flats are physically combined into one home. Buyers should ensure they get proper approvals when combining flats to claim these tax benefits.

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Sandeep Sadh

About Sandeep Sadh

Sandeep Sadh has been in the real estate business since 1993 in Mumbai. He has expertise in Buying, Selling, Leasing properties in Mumbai and a deep understanding of legal and tax related matters due to his experience.

Summary

Over the years, he has experienced the City's growth. He has been a columnist in the Times of India with numerous articles, which bring about a clear picture of the real estate market in Mumbai. He is a regular on NDTV, CNBC, ET Now Real Estate and Zee News, giving his experienced quotes as and when required.

Builders jack up rates with market handle - The Indian Express
REALTY PLUS ORGANIZES THREE OF ITS FLAGSHIP EVENTS AT HOTEL TAJ SANTACRUZ MUMBAI - Exchange 4 Media/Realty Plus
Need'nt hurry yet to buy that new flat - The Indian Express
More luxury homes than city needs - The Indian Express
Don't wait to buy a home; prices won't drop - Rediff
Make real estate deals more transparent - Money Control
Real estate market could recover by Diwali - The Economic Times
Energy-efficient buildings increase return on your realty investment - The Economic Times
Should you buy property in a religious location? - The Economic Times
Are you paying a higher maintenance bill for housing society? - The Economic Times
Developers Are Rolling Out Offers. Homebuyers, Read The Fine Print Carefully - Bloomberg/Quint
Hot property destinations of 2007 - Rediff
Piramal's big bet - Business Today
Are you buying a 'safe' house? - Magicbricks

Sandeep Sadh has used information and technology since the year 1998 and now what people call it Prop Tech to cater to the needs of Home Buyer, Seller, Investor and Corporates, HNI and NRI looking to Buy/Sell or Lease their properties in the Mumbai Property Market.

Sandeep has a holistic experience of real estate be it Leasing an Apartment for your CEO in the most upmarket buildings, to enter into a long lease for your office in Mumbai in prime buildings or an Investment in good projects with a detailed analysis keeping in mind the Demand and Supply and other micro factors of the project/property.

Sandeep Sadh has developed a few websites like www.mumbaipropertyexchange.com, www.realestatemumbai.com, www.propi.in which augment the real estate consulting business.

Right from Investments in Primary Markets to Selling, leasing and specializing for NRI’s all over the world. He is an expert in NRI Home Buying and Selling and has a good understanding of the Income Tax laws pertaining to Selling a Property and Repatriating funds overseas or reinvesting based on Capital Gains etc.

Experience

Residential Leasing
Commercial Leasing
Residential Home Buying
Commercial Property Buying
Investment Properties with complete Property Management as your Real Estate Family office

While transacting in the above segments, he has complete experience and deep understanding of the paper work, his areas of expertise are :

Drafting of the Leave and License Agreements
MOU for Buying/Selling Properties
Drafting Agreement for Sale
Gift Deeds
Computing of Capital Gains with current ready reckoner values
Drafting of Supporting Power of Attorney.

As an add on Service, Sandeep Sadh has tied up with various Professionals like Lawyers and Chartered Accountants who add value in transacting and specially services for Non Resident Indians.

Application to Income Tax for Lower Tax Deduction Certificate – Through a qualified CA and keeping a grip on the traction so that the remittance back to Non Resident Indians after Selling the property is seamlessly transferred.

You can connect with Sandeep Sadh on ssadh@mumbaipropertyexchange.com

LinkedIn - https://www.linkedin.com/in/sandeepsadhmpe/

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Income Tax Tribunal Approves Exemption for Two Flats Treated as a Single Home - Section 54F