Budget 2017-18
: Win Some, Lose Some for House Property Owners..!
Sanket Dhanorkar
It's a mixed bag for
homeowners. While there is relief on capital gains taxation, some benefits
claimed by those with second homes have been taken away .
The holding period for
property to be considered for long-term gain has been brought down from three
(3) to two (2) years.
This means the tax
liability will come down from marginal rates to 20% (with indexation) for
anyone who wants to sell land or / a building after two years of holding.
“This will encourage
investment into real estate,“ says Mr. A. Balasubrahmanian, CEO, Birla
Sunlife Mutual Fund .
“Homeowners can now
liquidate the property earlier,“ says Mr. Rahul Manjrekar, partner, tax
& regulatory services, KPMG.
The government also
plans to expand list of financial instruments in which property sellers can
invest to claim exemption from capital gains tax under Sec 54 EC. Also, the
base year for indexation is proposed to be shifted from April 1, 1981 to April
1, 2001 for all classes of assets including immovable property . This shift in
base year would lead to more realistic computation of acquisition cost.
However, the Budget has
come as a setback for those claiming tax benefits on housing loan interest for
their second homes. Till now, individuals who had let out property could set
off the loss from housing property against their salary or / any other income, without any upper limit.
The Budget has proposed to cap this set off to Rs. 2 lakh, bringing parity with
tax benefits available on self-occupied property .
“These individuals will
be allowed to carry forward the losses not claimed for up to eight subsequent
years, but the immediate relief will be capped at Rs. 2 lakh,“ points out
Kuldip Kumar, partner and leader, personal tax, PwC India.
The Budget has revised
the definition of affordable housing as homes with carpet area of 30 square
meter in metros and 60 square meter for others, instead of saleable area. It
would make more homes eligible to be in this segment.
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