With the announcement of the Union Budget 2019-20, real estate experts predict its benefits for the affordable housing segment. Here’s why this union budget will be beneficial for the industry.
The real estate industry recently has been struggling with the low demand. The union budget 2019-20 however, has given some relief to it. Affordable housing segment is said to be benefited the most out of this.
More savings, more money
The Union Budget 2019-20 declares the tax exemption for the people having an annual income of 5 lakh rupees. This means a person with the annual income of Rs 6 lakh will be able to save up to Rs 28,000 annually.
This, in turn, would lead to more savings. For a family with two earning members, this annual savings can increase up to Rs. 56,000. In the ‘affordable housing’ sector, the loans are usually of around Rs 10 lakh and EMI of nearly Rs 10,000.
The portion of savings could be invested in the affordable housing sector thus benefiting the segment.
The Section 80 – IBA of the Income Tax Act extends the duration for the affordable housing approvals to one more year.
This is an obvious benefit to the affordable home buyers as more affordable homes will be available. Housing projects can be approved till 31st March 2020.
Benefit from the exemption of tax on Notional Rent
Earlier, people would hesitate to invest in the property for rental income as they were charged tax on the notional rental income from their second homes regardless of whether they put the property on rent or not.
With the exemption of notional rent, this hurdle is removed from the way of investors.
Another major benefit coming to the way of the “affordable housing” industry is the capital gains from selling one property and buying two.
As per the Union Budget 2019-20, the benefit of the capital gains under section 54 of the Income Tax Act will be increased to investment in two residential houses which was earlier one residential house to for a taxpayer having capital gains up to 2 crores.