Tax Reforms Could Be Considered In Budget 2018, Homebuyers Expectations

"Housing for All" has been at the top of the agenda of the government. Budget 2017 had introduced certain measures to boost the real estate sector and achieve the target by 2022.

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Tax Reforms Could Be Considered In Budget 2018, Homebuyers Expectations

“Housing for All” has been at the top of the agenda of the government. Budget 2017 had introduced certain measures to boost the real estate sector and achieve the target by 2022. Implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA) with effect from May 1, 2017, was another major step toward this end. To further promote affordable housing, the following tax reforms could be considered in the forthcoming Budget 2018.

Also Read: Residential Market To Remain Sluggish Till Second Half Of 2018

Housing loss set-off limit of Rs.2 lakhs should be increased in Budget 2018

Finance Act 2017 restricted the loss from house property which could be set off against other income, to Rs. 2 lakhs. House property loss in excess of Rs.2 lakhs has to be carried forward and adjusted against the rental income of future years.

Given the increasing cost of property and rate at which loans are availed, this limit of Rs.2 lakhs could be increased to Rs.3 lakhs per year to allow tax payers to set off a larger part of the house property loss against other income.

Additional deduction for pre-construction interest in Budget 2018

Income Tax Act provides that interest on housing loan paid for the period during which a house is under construction, can be claimed as a deduction in 5 equal instalments from the financial year in which the house property is completed.

The deduction for the pre-construction interest should be allowed in the year of payment or a separate limit should be prescribed for the deduction over and above the regular deduction of Rs. 2 lakh per year.

Also Read: GST Benefits, Goods & Services Tax Ground Reality for Homebuyers

Delay in construction of property (Budget 2018)

Deduction for interest on housing loan is extended to Rs.2 lakh instead of Rs.30,000, only if the construction of the house property is completed within 5 years from the end of the financial year in which the loan has been taken.

Tax payers could lose the tax benefit for no fault of theirs, if the construction is delayed by the builder beyond this period. Though RERA aims at ensuring timely completion of housing projects, tax laws should recognize this aspect and provide for relaxation of the period in case the project is delayed.

Also Read: Home Demand High But Real Estate Market Down, Affordable Housing

Incentives for first time home buyers in Budget 2018

Section 80EE of the Act provided an additional deduction of Rs.50,000 for first time home buyers whose housing loan was sanctioned during the period April 1, 2016 to March 31, 2017. This benefit should be extended to first time home buyers with loans sanctioned beyond 31 March 2017 also.

Also Read: 2018 Opportune Time To Buy Your Dream House, RERA Compliant Project

Source Link- http://www.businesstoday.in/

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