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Section 54 of Income Tax
When you sell a property for a profit, you need to pay capital gains tax. In case you have held the property for three years or longer, it becomes long term capital gains. Section 54 gives income tax rebate on this long term capital gains tax liability in case of residential property.
To qualify under Section 54 of Income Tax, you need to either buy another residential property within two years of sale of the old one or construct a residential property within three years of sale of the old one. This new house should not be sold for a minimum of three years (if it is, capital gains tax is applied there).