Sold Your Flat and Buying Another? Section 82 Is the New Section 54

Under the Income-tax Act, 2025, section 82 replaces section 54 for reinvesting a home sale's long-term gain in a new house. Time limits, the Rs 10 crore cap and pitfalls.

Luxury residential tower with a patterned gold facade overlooking the Mumbai coastline

Upgrading from one Mumbai flat to a bigger one is the most common move I see families plan. The tax rule that makes it efficient has a new number under the Income-tax Act, 2025, so here is what it says now.

What is Section 82 of the Income-tax Act, 2025?

Section 82, titled "Profit on sale of property used for residence", lets an individual or HUF avoid tax on the long-term capital gain from selling a residential house if the gain is reinvested in a new residential house in India (Income Tax Department). It does the job the old Section 54 did.

How long do I have to buy the new house?

Buy it within 1 year before or 2 years after the sale, or
Build it within 3 years after the sale.

How much of the gain is exempt?

If the new house costs at least as much as the gain, the whole gain is exempt.
If it costs less, the difference is taxed.
Cost of the new house above Rs 10 crore is ignored.

Can I buy two houses?

Once in your lifetime, if the gain doesn't exceed Rs 2 crore, you can invest in two residential houses in India instead of one.

What if I haven't bought the new house by the time I file my return?

Deposit the unused amount in the Capital Gains Account Scheme with a specified bank before the return due date. If it isn't used within three years of the sale, the unused amount becomes taxable in that year.

Plan the next home before you sell the current one. The tax saving depends on the dates as much as the amounts.

The pitfall: selling the new house too soon

If you sell the new house within three years of buying or building it, the earlier exemption is effectively clawed back when you calculate the gain on that sale.

What if I sold something other than a house?

A different provision, Section 86 (the old 54F), applies when you sell a long-term asset that isn't a residential house and invest the net sale proceeds in one residential house. It has its own conditions, including limits on how many other houses you can own (Income Tax Department).

What this means for you

Sellers upgrading: line up your purchase timeline with your sale. Our seller's guide and valuation desk help with pricing.
NRI sellers: the buyer deducts TDS on the full sale price, which can be far more than your final tax. A lower deduction certificate helps; see Form 128.
Buyers: sellers planning a reinvestment care about dates. Being flexible on possession can win you a better price.

The Park, Worli: residential towers with landscaped podium gardens — Selling to upgrade? See our buy and sell desk.

Frequently asked questions

What replaced Section 54 in the new Income-tax Act?

Section 82 of the Income-tax Act, 2025 covers reinvesting the long-term gain from selling a residential house in a new house.

How long do I have to reinvest under Section 82?

Buy within 1 year before or 2 years after the sale, or build within 3 years after it.

Is there a cap on the Section 82 exemption?

Yes. The cost of the new house above Rs 10 crore is ignored.

Related reading

Planning a sale and a purchase? Book a video call or WhatsApp me.

Warmly,
Yanik

General information, not tax advice. Please plan this with your chartered accountant.

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