Taxation planning is one of the vital aspects of personal finance. The taxation on different investment options varies as per government rules. Many individuals have a high disposable income. The income may come from a job, business or investing in the stock market. If you are looking for investment options which can lower your tax burden, you must consider investing in real estate.
In an X post titled, “The Secret Tax Hack of the Wealthy”, CA Nitin Kaushik has explained how investing in real estate can save you significantly in terms of taxes. This can be done through Section 54F of the Income Tax Act.
He starts the post by writing, “What if I told you… you could sell gold, land, or even shares worth crores and pay ZERO tax on capital gains? Yes, it's 100% legal. The answer lies in Section 54F of the Income Tax Act.”
The Secret Tax Hack of the Wealthy 🏠💰
What if I told you… you could sell gold, land, or even shares worth crores and pay ZERO tax on capital gains?
Yes, it's 100% legal.
The answer lies in Section 54F of the Income Tax Act.
Here's your step-by-step playbook 👇🧵… pic.twitter.com/A47wvCEAMGSeptember 30, 2025AdvertisementHere is a breakdown of his explanation of how to save taxes by investing in real estate:
Rationale For Section 54F
Kaushik first explains that Section 54F exists to encourage people to invest in real estate.
“The Govt wants you to channel your money into real estate. So, if you sell any long-term asset (except a house) and reinvest in ONE residential house in India, you can escape capital gains tax,” he writes.
He adds that this is how smart investors move from “paper wealth” to “real assets”.
Eligibility
Only individuals and Hindu Undivided Families (HUFs) can claim exemption under Section 54F.
Another condition is that for Section 54F to be applicable, the residential property must be bought within one year before or two years after the sale.
AdvertisementIt will also be applicable if you construct a house in India within three years of sale. You cannot own more than one house on the date of transfer.
The exemption will be void if any of these conditions are missed, he underlines.
Assets That Can Be Sold
The CA says selling the following assets makes you eligible for exemption under Section 54F: gold, shares, investments in mutual funds, land, plots and commercial property.
Formula For Calculating Exemption
The exemption is calculated by using the following formula:
Exempt LTCG = LTCG × (Investment in new house ÷ Net Sale Consideration)
“Meaning: The more you reinvest, the higher the exemption,” Kaushik says.
He adds that there's a “maximum exemption cap of Rs 10 crore under Section 54F. Even if your investment in the new house exceeds Rs 10 crore, only Rs 10 crore will be considered for exemption calculation as per the latest tax rules (effective from April 1, 2024)”
Kaushik concludes the post by saying, “Section 54F is not just a ‘tax exemption'. It's a bridge: converting volatile assets into stable wealth (real estate), while protecting your gains.”
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