Save Tax on Mutual Funds & Property Sale with These Smart Moves

The timeline for buying a new home is either 1 year before or within 2 years from the date of sale. If constructing, it must be completed within 3 years.

Income Tax Act

Selling assets like mutual funds or property attracts a long-term capital gains (LTCG) tax. But, you can avoid it with proper planning using Sections 54 and 54F of the Income Tax Act.

Section 54F - Exemption for Sale of Non-Residential Assets

Sell non-residential assets like gold or mutual funds and buy a new house to get an LTCG tax exemption. The key rule: you must own only one house on the date of the sale.

Section 54 - Exemption for Sale of a House

Sell a house and use the gains to buy a new one for a tax exemption under Section 54. There's no limit on how many houses you own. Just follow the purchase/construction timelines.

How to Use Both Sections

In some cases, you can use both Sections 54 and 54F. Tax experts advise selling one of your houses before selling a mutual fund to meet the 'own only one house' rule.

Long-Term Capital Gains Tax

You can avoid long-term capital gains tax if you sell assets and use the money to buy a house. Proper planning with Sections 54 & 54F can greatly reduce your tax burden.