Section 54F Under-Construction Property: In the Ask Wallet-Wise series, readers send personal finance questions and experts explain them in simple words. One reader, Venkataramani, said he booked an under-construction flat in May 2025 and signed an agreement with the builder. He has been paying the builder in parts and those payments may go on till May 2026. He also said most of this money came from selling long-term equity investments, mutual fund units, and gold bonds that he had bought earlier.
His main doubt was simple. He wanted to know if he can still claim tax relief under Section 54F for FY 2025-26, even though the flat is still being built and the last payment may happen in the next financial year. Under Section 54F, tax relief can be available when long-term capital gains come from selling a long-term asset other than a residential house, and the net sale money is put into one residential house in India. The law allows purchase within 1 year before or 2 years after the sale, and it allows 3 years after the sale in cases of construction.
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The expert explained that for an under-construction flat, the bigger point is not when the building work first started. What matters more is whether the house gets completed inside the allowed time.
So even if the flat was booked before the sale of the shares, mutual funds, or bonds, the claim can still work if the construction is finished within 3 years from the date those capital assets were sold. Courts have also taken a similar view in cases involving construction, where the focus stayed on the allowed time window for completion and investment.
Which Date Matters for Section 54F?
The second question was about registration. The reader wanted to know if the flat must be registered in the same financial year or whether registration can happen later after the final payment is done. The expert’s view was that the registration date of the agreement is not the main deciding point for this kind of claim. In these cases, tax treatment usually turns more on whether the required investment and construction happen within the time allowed under Section 54F, not only on the date when registration is done.
That means the reader can claim the exemption for the money already paid and also for the payments being made, as long as the Section 54F conditions are finally met. There is one practical thing people should remember though. If some sale money is still not used before the return filing deadline, the law says that amount normally has to be placed in the Capital Gains Accounts Scheme before the due date under section 139(1), otherwise the full claim can get affected.
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What if the Flat is Registered with the Wife’s Name too?
The third doubt was about joint registration with the wife. Right now the builder agreement is only in the reader’s name, and he says he alone is paying the full amount. He wanted to know if adding his wife’s name at the time of registration could create a problem for the exemption.
The expert said this should not spoil the claim, as long as the required payment is made by him and the builder agrees to make the needed change in the paperwork.
That view also fits with court rulings that have allowed Section 54F benefit where the new house was bought in joint names with the spouse, because the real funding still came from the assessee and the law does not clearly say the new house must stand only in that one person’s name.
