When an individual or HUF sells a residential house held for the long term and reinvests the capital gain into another residential house, the gain (subject to conditions) can be claimed as exempt from tax.
The property sold must be a long-term capital asset (held beyond the specified holding period).
The new residential property must generally be purchased within 1 year before or 2 years after the sale, or constructed within 3 years of the sale.
The exemption is typically available for investment in one residential property, with a one-time option in certain cases to invest in two properties if the gain is below a specified threshold.
High-value transactions may be subject to an upper limit on the exemption — this has changed in recent years, so it's worth confirming the current cap.
Timing the reinvestment correctly, and using the right acquisition documentation, matters a lot here — an exemption claimed incorrectly can be reversed on scrutiny.