Budget 2019: 4 Booster Proposals that will encourage Realty Market this Year
The Budget 2019 is set to bring few real estate sector-friendly proposals into the market to cheer the ailing Non-Banking Financial Companies (NBFCs) Liquidity crisis which played a perfect spoilsport last year. Financial Year 2019 has been a motley bag year for the Indian real estate scenario. This year witnessed the grand emergence of the new asset class- Industrial and Warehousing. Also, the commercial real estate class performed above expectations across various cities and filling of the Red Herring Prospectus for India’s first REIT was like the perfect icing on the cake of the prodigious performance in the commercial realty market. The residential sector showed positive signs as well this year but the NBFC liquidity crisis played the perfect spoilsport. Budget 2019 is ready with proposals that are sure to bring a sigh of relief and cheer the market. Let’s take a look at such Booster proposals that are going to give your property market a leg up:
Section 80-IB Deduction Allowances & Benefits:
The Budget 2019 proclaimed allowance of Section 80-IB benefits by yet another one year. The government’s “Housing for All” programmes will be aided by these allowances and will give a push to the affordable segment. The ailing housing sector has managed to revive itself with the help of Section 80-IB benefits. Many developers who were in the planning phase of 80-IB compliant projects will now get a respite in terms of receiving approvals for such projects. An increase in inventory of 80-IB compliant units will benefit more end-users. This is a seamless welcome move for the developers as well as the end-users.
Unsold inventory to be taxed as per notional rental income:
Previously unsold inventory was taxed as per notional rental income after one year of completion. This, in particular, was a subtle blow for the ailing real estate sector. In a slow market, it was anyway difficult to move the inventory and to add on to the problems, there was the burden of tax incidence on notional rental income within one year from completion. The government has now given the assistance of this to the developers. Unsold inventory will be taxed as per notional rental income only post two years of completion. This will give a respite to real estate developers sitting with unsold inventory.
Non-Leased second house property will not be taxable
Until the financial year 2019, notional rental income from second house property that was not leased was taxed. This created a huge trench on the cash flow of investors. The real estate market is slow and yield from residential properties is at an all-time low situation. In such a scenario it was prejudicial to tax notional rental on non-leased house property. The government has revised this rule and for the financial year 2020, second house property that is not leased will not be taxed.
Long Term Capital Gains Benefit from the sale of house
Long-term capital gains from the sale of house can now be invested for purchasing two other properties instead of the earlier mandated single property. This will enable home buyers to take a decision pertaining to purchasing property faster. This will also lead to residential sector growth. Large residential properties with momentous values made it very difficult for owners to sell and create multiple assets. With this new law, owners will now be able to invest in two residential assets and reduce the burden of capital gains.