If you reinvest your capital gains in another property within a specified time period, you can claim an exemption under the following sections -
Section 54: If the gains from selling a residential house are reinvested in another house property within 1 year before or 2 years after the sale date, or if the new property is constructed within 3 years from the sale date, the entire amount is exempt from tax.
Section 54F: If the gains from selling any long-term asset are reinvested in a residential property within 1 year before or 2 years after the sale date, or if the new property is constructed within 3 years from the sale date, the entire amount can be claimed as a tax exemption.
However, there are other ways to save tax on LTCG from sale of property too. Given below are the alternative methods -
Section 54EC Exemption: Invest capital gains in NHAI, REC, IRFC, or PFC bonds within 6 months of the sale for full tax exemption.
Section 54GB Exemption: Reinvest proceeds from the sale of residential property into eligible start-ups within the specified timeframe to claim an exemption.
Capital Gains Account Scheme (CGAS): If you can't invest in a new property immediately, deposit the gains in CGAS. The amount must be reinvested in a new house within 2 years to maintain the exemption. If not used within this period, the LTCG will be taxed in the year the gains were realized.