HUF property transfer may help claim 54F exemption on share sale

Livemint.com reports that taxpayers selling shares can potentially claim Section 54F exemption by transferring one residential property to their Hindu Undivided Family (HUF). The exemption under Section 54F of the Income Tax Act (Section 86 of the 2025 Act) is not available if the taxpayer owns more than one residential house on the date of the sale.

According to chartered accountant Mahesh Nayak of CNK & Associates, gifting a property to an HUF where the individual is the karta may allow the claim, even though income from the property remains clubbed in the individual’s hands. Since the HUF is not a separate legal entity, legal ownership does not change. The applicability of stamp duty on such a transfer is debatable, and Nayak recommends seeking proper legal advice or getting the document adjudicated by stamp authorities before execution.