Budget 2019: Your dream house may soon become cheap; if your real estate developer is happy, then so will you be - a PM Modi gift
While announcing the Budget, interim Finance Minister Piyush Goyal also revealed that now the government has proposed exemption on levy of income tax on notional rent on a second self-occupied house.
Budget 2019 Housing: If your real estate developer is happy, then so will you be! Why? Because then he or she will be able to offer you a house at a much cheaper rate! Yes, you read that right. This is the 'gift' Prime Minister Narendra Modi has given to homebuyers. While announcing the Budget, interim Finance Minister Piyush Goyal also revealed that now the government has proposed exemption on levy of income tax on notional rent on a second self-occupied house. Currently, income tax on notional rent is payable if one has more than one self-occupied house.
This is a great news for real estate developers! Aashish Agarwal, Head-Consulting Services at Colliers International India, said, “With exemption on notional rent for self-occupied second homes, the Government has addressed a significant pain point for the middle class, particularly migrants with dependent parents."
Agarwal decoded the relief from the benefits for potential homebuyers by saying, "Along with capital gains exemption for up to two houses, this will allow people to have a diversified portfolio for real estate investment - which will spur demand across the country, including Tier 2 and Tier 3 cities.”
Gagan Randev, National Director, Capital Markets and Investment Services explained it further by saying, "The modification of Capital Gains provisions from Sale of property under Sec 54 applicable for the purchase of 2 houses (once in a lifetime) would be a big boon to people who may have sold historically held houses and encourages them to go in for two houses rather than put all the money into one house. It specially helps those who are looking at purchasing the same for their children."
He added, "The exemption of Notional rent on Developers (for unsold inventory) to 2 years from 1 year is again very positive as it would allow Developers to sell their unsold inventory at a rationale pricing over a decent period."
Income from house property is taxable on the basis of annual value. Even if the property is not let out, notional rent receivable is taxable as its annual value.
— Zee Business (@ZeeBusiness) February 1, 2019
According to section 23 (1)(a) of IT Act, ) the annual value of any property shall be the sum for which the property might reasonably be expected to be let out from year-to-year. In determining the annual value there are four factors which are normally taken into consideration. These are -
i) Actual rent received or receivable,
ii) Municipal value,
iii) Fair rent of the property,
iv) Standard rent.
Was it a good move or bad one from Narendra Modi and Piyush Goyal?
Well, the proof of the pudding lies in the eating. Investors have already given a thumbs up to this new development, as they continue to buy realty stocks and boost them to a higher level.
Currently, the S&P BSE Realty is trading at 1,800.10 above 26.01 points or 1.47%. Stocks that saw massive buying were Phoenix, Oberoi Realty, Indiabulls Real Estate, Godrej Properties, DLF, Sobha, Sunteck, Prestige Industies and OMAXE in the range of 0.40% to 3.50% at around 1503 hours.