Win Some, Lose Some for Prop­erty Own­ers

House on rent won’t get un­lim­ited tax de­duc­tion

The Economic Times - - Front Page - Times­

NIS­HANT GUPTA, 31 LOKNATH BHATIA, 67 MUKUND DALAL, 51 Mum­bai: It’s a mixed bag for home­own­ers. While there is re­lief on cap­i­tal gains tax­a­tion, some ben­e­fits claimed by those with sec­ond homes have been taken away.

The hold­ing pe­riod for prop­erty to be con­sid­ered for long-term gain has been­brought­down­fromthree­totwo years. This means the tax li­a­bil­ity will come down from mar­ginal rates to 20% (with in­dex­a­tion) for any­one who wants to sell land or a build­ing af­ter two years of hold­ing. “This will en­cour­age in­vest­ment into real es­tate,” says A. Bala­sub­rah­ma­nian, CEO, Birla Sun­life MF. “Home­own­ers can now liq­ui­date the prop­erty ear­lier,” says Rahul MADHUMITA SEN, 41 Ba­sic ex­emp­tion limit

Net tax­able in­come

Tax Re­bate Tax Sur­charge Cess Man­jrekar, part­ner, tax & reg­u­la­tory ser­vices, KPMG.

The gov­ern­ment also plans to ex­pand list of fi­nan­cial in­stru­ments in which prop­erty sell­ers can in­vest to claim ex­emp­tion from cap­i­tal gains tax un­der Sec 54 EC. Also, the base year for in­dex­a­tion is pro­posed to be shifted from April 1, 1981 to April 1, 2001forall­class­esof as­setsin­clud­ing im­mov­able prop­erty. This shift in base year would lead to more re­al­is­tic com­pu­ta­tion of ac­qui­si­tion cost.

How­ever, the Bud­get has come as a set­back for those claim­ing tax ben­e­fits on hous­ing loan in­ter­est for their sec­ond homes. Till now, in­di­vid­u­als who­hadletout­prop­er­ty­could­setoff the loss from hous­ing prop­erty against their salary or any other in­come, with­out any up­per limit. The Bud­get has pro­posed to cap this set off to ₹ 2 lakh, bring­ing par­ity with tax ben­e­fits avail­able on self-oc­cu­pied prop­erty. “These in­di­vid­u­als will be al­lowed to carry for­ward the losses not claimed for up to eight sub­se­quent years, but the im­me­di­ate re­lief will be capped at ₹ 2 lakh,” points out Kuldip Ku­mar, part­ner and leader, per­sonal tax, PwC In­dia.

The Bud­get has re­vised the def­i­ni­tion of af­ford­able hous­ing as homes with car­pet area of 30 sq. m. in met­rosand60sq.m.forothers,in­steadof saleable area. It would make more homes el­i­gi­ble to be in this seg­ment. “These homes will be avail­able with­in­pe­riph­eriesof ma­jorci­tiesin­stead of be­ing far away from the city lim­its,” says Jayashree Ku­rup, head of con­tent & re­search, Mag­icBricks.

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