Real estate sector in India witnessed significant growth with the implementation of government policies and infrastructure developments. The recent Union Budget 2019-20 proposal introduced with the theme to Energize real estate sector, primarily geared towards rural growth, infrastructure, and affordable housing.

Budget 2019 Update

Nirmala Sitharaman, in Budget 2019 speech, announced the increase in the deduction on loans taken for affordable housing valued up to Rs 45 lakh from Rs 1.5 lakhs to Rs 3.5 lakhs per annum. This will benefit for loans taken up to 31st March 2020. Now an individual will get an enhanced interest deduction up to Rs 3.5 lakhs on buying an affordable house. The middle-class home buyers can benefit up to 7 lakhs over a loan period of 15 years. This proposal will also provide a boost to the housing sector.

Conditions to Avail the Home Loan Benefit

• The value of the house that you are buying should not be more than Rs 45 lakhs.
• The home loans should be issued between 1st April 2019 and 31st March 2020 with the irrespective of the date of actual loan or purchase of the home.
• If you have booked an under-construction property before April 1, 2019, you can still claim this benefit.
• The amount of Rs 1.5 lakhs interest benefit is applicable if the home loan is taken from a financial institution. So, if a loan taken from a housing finance company, shall not qualify for this benefit.
• If the borrower has any house, this benefit is not applicable.

Top 3 Tax Benefits For Property Owners

• With the recent budget 2019 proposal, the taxpayers will get exemption of notional rent on a second self-occupied property. Previously the individual who has two own houses have to pay tax on notional rent. If their second house is in their native place or it is used by their parents for which no rent is received. This made many taxpayers into extreme financial pressure. However, with the new budget proposal, the taxpayers would not have to pay any notional rent if they have more than one house as self-occupied.
• Presently, a taxpayer can claim the tax benefits for long-term capital gains on the sale of the residential house, if these long-term capital gains are invested for buying or constructing another residential house, within the specified time. The interim budget 2019 proposal has extended this benefit that if buying or constructing two residential houses, to claim the exemption under Section 54. The amount provided for capital gains does not exceed Rs 2 crores. Once a taxpayer claims the exemption for buying or constructing two houses, he cannot claim the exemption for the same year.
• The interim budget 2019 proposal benefited the property owners with the increased limit for rent on which the resident will deduct tax, before paying the rent to the owner. The present tax limit is Rs 1.80 lakhs, so now the resident can deduct TDS if the annual rent exceeds Rs 2.40 lakhs. The tax is deducted if the resident is other than an individual or a Hindu Undivided Family (HUF) while paying rent to the house if he is involved in business or professions which were subjected to tax audits in the previous years.

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By: Shailaja K