Win Some, Lose Some for Property Owners
House on rent won’t get unlimited tax deduction
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.