New Delhi, June 21 -- Taxpayers who earn long-term capital gains from the sale of a residential property can reduce or even eliminate their tax liability by reinvesting the gains in another residential house. The benefit is available under Section 54 of the Income Tax Act, which permits an exemption on long-term capital gains when the proceeds are used to purchase or construct a residential property.

Yes. A taxpayer can claim exemption under Section 54 by investing in an under-construction residential property. The law allows a period of up to three years from the date of sale of the original asset for completion of construction. Therefore, many taxpayers use under-construction projects as a tax-saving avenue while acquiring a new home....