New Delhi, March 26 -- If we sell our residential house for, say, Rs.50 lakh, do we have to invest the full 50 lakh to buy another residential house property, or do we only need to invest the long-term capital gains? I was under the impression that only the capital gains amount needed to be invested in another residential house property, but confusion arose because my neighbour who had sold his shop was advised by his CA to use the entire sale proceeds to claim the full exemption from tax on long term capital gains.

There are two different provisions under the income tax laws where the exemption for the investment made in a residential house is available to an individual and a HUF. The first is under Section 54, and the other is under Se...