How to claim full Section 54 exemption when a jointly titled home was funded solely by you
If you financed a jointly owned house entirely with your own money, you can treat yourself as the sole beneficial owner and claim a 100 % Section 54 long-term capital gains exemption on a new property in your name.
According to senior taxation adviser Shubham Agrawal, when a husband and wife own a house together but the purchase money came exclusively from the husband, the husband is deemed the 100 % beneficial owner. He may therefore buy the replacement home solely in his name and still qualify for the full Section 54 exemption on long-term capital gains. To support the claim, he should retain proof of the original payment and ensure the buyer withholds tax using his PAN alone, while reporting the full sale proceeds in his income-tax return.
The wife’s AIS may list the sale, but she can submit a correction indicating the transaction pertains to a different PAN. Section 54 exempts gains up to the amount invested in a new Indian residential property bought within one year before or two years after the sale, or constructed within three years, with a ceiling of Rs 10 crore and a lock-in period of three years on the new asset.
Why it matters
It clarifies how spouses can maximize tax relief on house sales when only one partner funded the purchase.
In this story
