Profit on sale of property used for residence
[Section-82 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 82(1) of Income Tax Act 2025
82(1) Where an individual or Hindu undivided family––
- (a) has long-term capital gains arising from the transfer of a capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head “Income from house property” (original asset); and
- (b) has within one year before or two years after the date of such transfer purchased, or has within three years after that date constructed, one residential house in India (new asset),
then, instead of the capital gain being charged to income-tax as income of the tax year in which the transfer took place, it shall be dealt with as follows:—
- (i) if the capital gains exceeds the cost of the new asset, such excess shall be charged under section 67, and for computing capital gains arising from the transfer of the new asset within three years of its purchase or construction, the cost shall be nil; or
- (ii) if the capital gains is equal to or less than the cost of the new asset, no capital gains shall be charged under section 67 and for computing capital gains from the transfer of the new asset within three years of its purchase or construction, the cost shall be reduced by the amount of the capital gains.
Section 82(2) of Income Tax Act 2025
82(2) If the capital gains is not used by the assessee to purchase the new asset within one year before the transfer of the original asset, or is not utilised for the purchase or construction of a new asset before filing the return of income under section 263, then—
- (a) the unutilised amount shall be deposited in a specified bank or institution and utilised as per the scheme notified by the Central Government;
- (b) such deposit shall be made not later than the due date applicable in the case of the assessee for filing the return of income under section 263(1); and
- (c) the proof of deposit shall be submitted along with the return on or before the due date of filing of the return.
Section 82(3) of Income Tax Act 2025
82(3) For the purposes of sub-section (1), the amount, already utilised for purchasing or constructing the new asset, together with the deposited amount under sub-section (2) shall, subject to sub-section (7), be deemed to be the cost of the new asset.
Section 82(4) of Income Tax Act 2025
82(4) If the amount deposited under sub-section (2) is not fully utilised for purchasing or constructing the new asset within the period specified in sub-section (1), then,—
- (a) the unutilised amount shall be charged to tax under section 67 as the income of the tax year in which the period of three years from the date of the transfer of the original asset expires; and
- (b) the assessee shall be entitled to withdraw the unused amount according to the said scheme.
Section 82(5) of Income Tax Act 2025
82(5) If the capital gains under sub-section (1) does not exceed two crore rupees, the assessee may, at his option, purchase or construct two residential houses in India, and where such option has been exercised,—
- (a) for the purposes of sub-section (1)(b), “one residential house in India” shall be read as “two residential houses in India”; and
- (b) for the purposes of sub-sections (1)(b) and (2), “new asset” shall mean two residential houses in India.
Section 82(6) of Income Tax Act 2025
82(6) If during any tax year, the assessee has exercised the option mentioned in sub-section (5), he shall not be entitled to exercise such option for the same tax year or any other tax year.
Section 82(7) of Income Tax Act 2025
82(7) If the cost of new asset exceeds ten crore rupees, the amount exceeding ten crore rupees shall not be taken into account for the purposes of sub-section (1).
Section 82(8) of Income Tax Act 2025
82(8) If the capital gains on the transfer of original asset exceeds ten crore rupees, the amount exceeding ten crore rupees shall not be taken into account for the purposes of sub-section (2).
FAQs on Section 82 of Income Tax Act 2025
1. What type of assets are eligible under Section 82(1) of the Income Tax Act, 2025?
Residential buildings or lands appurtenant thereto, the income of which is chargeable under “Income from house property”, are eligible.
2. Who can claim the benefit under Section 82(1)?
Only an individual or a Hindu Undivided Family (HUF) can claim the benefit.
3. What is the time limit for purchasing a new residential house under Section 82(1)?
The new house must be purchased within one year before or two years after the date of transfer of the original asset.
4. What is the time limit for constructing a new residential house under Section 82(1)?
The new house must be constructed within three years after the date of transfer of the original asset.
5. What happens if the capital gain exceeds the cost of the new asset?
The excess amount is charged to tax under section 67, and for future sale within three years, the cost of the new asset shall be taken as nil.
6. What happens if the capital gain is equal to or less than the cost of the new asset?
No capital gains shall be charged under section 67, and if the new asset is transferred within three years, the cost of acquisition shall be reduced by the amount of exempted capital gain.
7. What if the capital gains are not fully utilised before filing the return?
The unutilised amount must be deposited in a specified bank or institution under a government-notified scheme.
8. By when must the deposit be made in the specified account?
It must be made before the due date for filing the return under section 263(1).
9. Is any proof of deposit required to be submitted?
Yes, the proof of deposit must be submitted along with the return of income.
10. How is the cost of the new asset calculated if part of the capital gain is deposited?
The sum of the utilised amount and the amount deposited under sub-section (2) is treated as the cost of the new asset.
11. What happens if the amount deposited is not utilised within three years?
The unutilised amount shall be taxed under section 67 in the tax year when the three-year period expires.
12. Can the assessee withdraw the unutilised deposit after three years?
Yes, the assessee can withdraw the unused amount according to the specified scheme.
13. Is it possible to invest in two residential houses instead of one?
Yes, if the capital gains do not exceed two crore rupees, the assessee may opt to invest in two residential houses.
14. What is the condition to purchase or construct two houses under Section 82(5)?
The total capital gains must not exceed two crore rupees, and the assessee must exercise the option for that tax year.
15. Can the option to purchase or construct two houses be exercised multiple times?
No, once the option is exercised, it cannot be exercised again in the same or any other tax year.
16. What is the limit on the cost of the new asset for exemption purposes?
If the cost of the new asset exceeds ten crore rupees, the excess amount is ignored for exemption.
17. What is the limit on capital gains for exemption purposes?
If the capital gains exceed ten crore rupees, the excess is ignored for exemption purposes.
18. What happens if both cost and capital gains exceed ten crore rupees?
In such a case, only up to ten crore rupees is considered both for the cost of the new asset and for the capital gains amount.
19. Is exemption available if the new house is purchased outside India?
No, the new residential house must be situated in India.
20. What if the new house is sold within three years of its purchase or construction?
Special rules apply: either the cost is taken as nil or reduced by the amount of exempted capital gains, depending on whether full exemption was claimed or not.
