Budget 2019 has certainly brought some positivity into the Real Estate world especially for the home buyers. The housing prices are expected to see a major shift and home buyers can see affordable housing benefits especially for the middle-class builders. Interim Finance Minister Piyush Goyal has announced reforms right from tax deducted at source (TDS) on house rent exempting tax limit for home buyers having two properties.
Many Real Estate experts say that the Budget 2019 will bring some positivity into the Real Estate Sector. For first time home buyers in Palava, this Budget is going to bring a lot of benefits, glimpses of some of which are:
- Exemption on levy of income tax on notional rent in cases of second occupied property. Presently, income tax on notional rent is payable.
- TDS threshold for deduction of tax on rent is proposed to be increased from Rs. 1,80,000 to Rs.2,40,000 for providing relief to small taxpayers.
- Under the affordable housing scheme, the benefits under section 80-1BA of the Income Tax Act has been extended for one more year for making buying homes for affordable. It is however for projects that have been approved till March 31, 2020.
Tax Exemption on Notional Rent on second self-occupied house
Currently, the tax is payable on notional income coming from the second self-occupied house property. After the announcement of interim budget 2019, the homeowners can enjoy the tax exemption on notional incoming coming from self-occupied second house property as well. Considering the middle-class challenges wherein they have to maintain families at two different locations for job, education or for the care of parents, the Finance Minister has proposed to exempt tax in notional rent on a second self-occupied house. However, the cumulative limit of the tax deduction for interest paid remains unchanged.
Deduction on profits from an affordable housing project
Under the affordable housing scheme of the government, more affordable homes are being made available. For this, the Finance Minister Piyush Goyal announced the benefits under Sectio80-1BA of Income Tax Act are being extended for one more year, which is for projects approved till 31st March 2020. The income Tax deduction is currently available on profits derived from developing an affordable housing project which has been approved during 1st June 2016 till 31st arch 2020. The deductions on profits on building affordable housing will enable developers to reduce tax cost and ultimately the Palava home buyers will benefit from it.
TDS limit for Rent is extended
TDS threshold for deduction of tax on rent is proposed to be increased from Rs. 1, 80,000 to Rs.2, 40,000 for providing relief to small taxpayers. This is, however, a small change but it will certainly benefit the middle and small taxpayers in the long term if the proposal comes into play.
The benefit of rollover of capital gains under section 54 of the Income Tax Act
Currently, the long term capital gain on sale of a residential house is exempted from tax deductions if the money gained in reinvested in purchase/ acquisition of another (one or single) residential house. In the interim Budget 2019, it has been proposed that the proceeds gained from the sale of residential property can now be reinvested in two houses provided that the capital gain does not exceed Rs 2 crore and the benefits of this option can only be availed once in a lifetime.
Income Tax Rebate on annual income increased
Furthermore, the rebate on annual income increased up to Rs 5 lakhs. Individual taxpayers having taxable annual income up to Rs 5 lakh will get a full tax rebate and therefore will not be required to pay any income tax.
Besides, all the above benefits for homebuyers, a separate group of ministers have been formed to work upon reducing the GST burden on homebuyers. Therefore, the homebuyers are going to enjoy some substantial benefits from this Budget and will find it easy to buy a home in 2019.