Union Budget 2017- Changing Home Loans and Real Estate
Finance Minister Arun Jaitley’s announcing Union Budget 2017, made India’s middle-class roar for the inclusion of citizen-friendly changes in the tax slab. Another major development was the GST Bill that would make taxation simpler. Perhaps the most sought-after part of the speech for those interested in real-estate investment was the revision made in home loan rules.
Arun Jaitley made it clear in his budget speech that the tax profits enjoyed by rent collectors would be reduced somewhat. In the budget speech, the Finance Minister said, “In order to address the existing anomaly of interest deduction in respect of let out property vis-a-vis self-occupied property, it is proposed to restrict set off of loss from house property against income under any other head during the current year up to Rs 2 lakh.” He further added, “The loss not so set off would be allowed to be carried forward for set off against house property income for eight assessment years.”
This means that a loanee can seek a relaxation of Rs 2 lakh per annum after tuning the amount for his rental income. The cut can be countered forward for eight years. The home loan interest shoots up initially. According to most of the tax-connoisseurs, the numbers might be a little too high and they might not be able to compensate the deductions in the coming years.
So how will it affect the real estate business? For starters, this move in the Union Budget 2017 will shrink the chances of people buying extra property. But on the other hand, the affordable housing program has been given an infrastructure status. Here, the carpet area of 30X60 square meters will replace the built-up area of the same dimensions. For developers, a one-year tax break can be availed after receiving the unsold stock’s completion certificate. All of these contribute to a bitter-sweet experience for both of the real estate developers and consumers.