Housing and real estate are among the most important areas in an economy. Purchasing a home of one’s own is a dream that every individual professes. In fact, people save up for decades just to be able to purchase a house of their own.
Thankfully, Budget 2017 has given developers as well consumers plenty to cheer about.
Changes in affordable housing
The Union Government has sought to provide buyers of affordable housing with bigger homes. Towards this end, it has increased the area allocation for affordable homes to a carpet area of 30 sq. mt. in metro cities areas and 60 sq. mt. in other places.
Earlier, people would lose out on precious space because while the dimensions allowed were same, they were for a “built-up” area than “carpet” area. The new provision means that this is the minimum amount of actual space that people buying homes under affordable housing schemes can enjoy.
For property developers, the Union Budget 2017 allows them 5 years instead of the current 3 years to complete their projects while enjoying tax exemption. This will help more players enter the industry and increase the amount of affordable homes in the country.
Investment gets a boost
Investors in real-estate stand to enjoy tax benefits under the provisions of the new proposed Budget. Finance Minister Arun Jaitley has reduced the holding period for long-term capital gains to 2 years from 3 years. Long term capital gains tax is beneficial to investors since it applies at a flat rate of 20% unlike short term investments which are taxed at rates equal to income tax.
Investors will now be able to enjoy the gains on the sale of their property without having to wait for 3 years to sell it.
Moreover, the Budget also says that the government will introduce new financial products and instruments to help people invest their proceeds from real-estate and qualify for tax benefits.
Cap on tax exemption on home loans
People with an existing home loan who had rented out their property could claim tax exemption upto any amount on the interest that they pay. This is set to change as the new Budget puts a cap of 2 lakh on the exemption thats allowed.
The good news though is that any additional interest paid above 2 lakhs on home loans can still be claimed as exemption in the subsequent years for up to a period of 8 years.
Tax your landlord
For tenants paying a rent of above 50,000 rupees a month will now be required to deduct 5% tax at source before paying the rent to their landlords. However, worry not: the entire tax deducted at source (TDS) collected by the tenant for the year will have to be paid off in full only once for the year.
This hugely benefits you as a tenant because your landlord will charge you their fair rent since the tax collected by you will allow the government to know how much income they make from their property. This will help curb the amount of black and undeclared money by property owners who let out their homes on rent.
The Union Budget is set to revolutionize the real-estate industry and bring in a lot of ease and streamlining from investors as well as home-owners. We hope you take note of these changes in case you were planning to purchase your dream property or are a tenant who needs to be aware of the new proposed law.
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