Home loan tax deduction, a boon to realty developers
The home loan incentive which was announced recently by the Finance Minister with the Union Budget 2013 has been the talk since its release. The real estate developers are the group who can cheer the most with the incentive.
One can claim the tax deduction only if his/her loan amount is less than Rs 25 lakh. Also, it has been mentioned that anyone who takes loan in between April 1, 2013 and March 31, 2014 can only be able to enjoy the benefit.
The developers can now expect to clear the growing pile of unsold stock over the past two years. Out of 583,513 unsold apartments present in the country, 39% cost less than 35 lakh.
According to property research firm Liases Foras, around 50% of the unsold apartments are in NCR region and 30% in Mumbai. With the incentive announced, buyers have shown increased interest in areas like Raj Nagar Extension in Ghaziabad, Noida Extension in Greater Noida and along the Yamuna Expressway.
Also, in Mumbai, areas like Badlapur, Kalyan, Vasai-Virar, Bhiwandi, Taloja, Kalamboli, Kamothe, New Panvel, Road Pali and some part of Karjat and Khopoli are witnessing more buyers’ interests.
With the release of Union Budget 2013, the Finance Minister has proposed to offer tax deduction on home loans to first time home buyers. This initiative has brought some cheer for the home buyers as there was no significant tax reliefs in the past.
Further, the Union Budget 2013-14 has proposed a deduction of Rs 1 lakh on home loan interest under Section 80 E which will be given in addition to the existing tax benefit of Rs 1.5 lakh under Section 24.
The move is good but to avail this deduction, there is a certain eligibility. The value of the property purchased should not exceed Rs 40 lakh. However, if you avail a deduction of say Rs 60,000 in 2013-14, you will be allowed to claim the balance Rs 40,000 in 2014-15.
This move will only help the home buyers in tier II and III cities and residents in metro cities may not be able to gain from this move as housing is more targeted towards the mid and upper income segments.
Developers in Mumbai were hoping that with the upcoming Union Budget 2013, it will improve investment volumes and general growth across real estate sector in Mumbai.
Mumbai real estate industry expects increased provisions of external commercial borrowings for low-cost housing, tangible tax relief for individuals and greater investments in infrastructure.
As buying a home is everyone’s dream, home buyers are keeping a track of the steps taken during the budget to decide their next course of action for investment on their dream home.
A well known developer in Mumbai said, Union Budget 2013-14 is expected to widen the tax benefits on housing loans. The real estate sector has been one of the major contributors to India’s GDP and is a growth driver for the economy.
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