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Even a small house built on a large plot qualifies sec 54

 Understanding Section 54/54F Exemptions: Saving Tax on Capital Gains with 
Residential Property Investments
By CA Bhavesh Panpaliya
 Q1. What are Section 54 and Section 54F exemptions under the Income Tax Act?
Answer:
These sections are powerful tools for saving long-term capital gains (LTCG) tax by 
investing in residential property.
• Section 54: Applicable when you sell a residential house and reinvest in another 
residential house.
• Section 54F: Applicable when you sell any other long-term capital asset (like 
land, shares, etc.) and reinvest the entire net consideration in a residential house.
 Key Insight: You must invest within 1 year before or 2 years after the sale (or 
complete construction within 3 years).
 Q2. Does the size of the house vs. land matter for exemption?
Answer:
Not at all. Even a small house built on a large plot qualifies.
 Delhi ITAT in Girish Mohan v. ACIT (2023) confirmed that the exemption extends to the 
entire cost — land + house, regardless of scale.
 Example: If you build a 1BHK on a 1-acre plot, the whole cost (land + construction) is 
eligible.
 Q3. Can I claim exemption on vacant land attached to the house?
Answer:
Yes! As long as the land is "appurtenant" to the residential house (i.e., part of the same 
property), it qualifies — even without construction
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