The interim union budget 2019-20 has a lot in offering to both the buyers and developers of homes in the form of tax reliefs and benefits. Home buyers are given many reliefs from notional rent to investing in two house property to claim exemption from tax. On the other side, realty developers who are building budget homes will get the benefit of section 80IBA for one more year.
The benefits given to the buyers will push them to acquire a second house property which can create a prospective demand in the house property market, which in turn will surely boost the holiday home segment. The major reliefs to homebuyers are –
- They can buy two separate properties to avail capital gain tax exemption on the sale of existing house property. However, this can be availed only once in their lifetime. At present tax payers can buy only a single property to claim tax benefit.
- There wont be tax implication on notional rent from the second property intended for self use. This will also attract prospective buyers to purchase a second property for self use.
- The limit of TDS on house property income has been increased to Rs 2,40,000 per annum from the current Rs. 1,80,000 per annum. This is applicable only if the rent is paid by a non-individual tenant, like corporates etc.
Builders of affordable housing projects are getting the relief of extension of the benefit of Sec. 80IBA by one more year. They can now register such projects until the end of financial year 2019-20 to avail the exemption from tax on profits from these projects. Under section 80IBA of Income Tax Act 2016, developers of houses upto 60 sq meter carpet area gets 100% deduction of their profits from such business. At present realty developers have to pay tax on their unsold inventory after one year of completion of residential projects. They can now claim exemption from their unsold inventory tax for two years. This will help the struggling developers to supply more homes in the market.
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