Key Hits And Misses In Union Budget 2019-20 For Real Estate Buyers

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    Now that Union Budget 2019-20 is finally out, there has been a wave of mixed emotions in the real estate industry. Although the industry was hoping for some ruling in GST and a fund for stalled projects, whatever that is being offered will have its own positive impetus on the realty segment.

    The budget seems to be in favor of increasing the purchasing power of the home buyers to a great extent. The proposals made in the budget has certainly brought cheer among prospective home buyers as well as those who own or wish to own more than one property.

    Budget 2019: Hits for home buyers

    • By proposing tax rebates for those earning Rs 5 lakh, Budget 2019 has tried to improve the purchasing power of the middle class to invest in homes.

    “A back of the envelope calculation on the new standard deduction rates and other direct tax sops give us a figure of an annual taxation exemption of almost Rs 7- 9 lakh per annum,” Shishir Baijal, Chairman and Managing Director, Knight Frank, told Realty Buzz IN. “We believe that a fair part of the savings from this could be channelized towards real estate.”

    • There will now be no tax on house rents up to Rs 2.4 lakh from the previous limit of Rs. 1.8 lakh. This can attract more investors to buy second homes for earning rental income.

    “For families which have more than one house – one in the home-town and the other in a location where family members work or have a job – currently, income tax on notional rent is payable in such cases (if one has more than one self-occupied house),” Niranjan Hiranandani, President, NAREDCO, said. “Considering the difficulty of the middle- class having to maintain families at two locations on account of their job, children’s education, care of parents, the Finance Minister mentioned a proposal to exempt levy of income tax on notional rent on a second self-occupied house.”

    • The benefit of rollover of capital gains has been increased from one house to two houses, up to 2 crore (once in a lifetime) is also a tremendous step.
    • Raising gratuity limit from Rs 10 lakh to Rs 30 lakh will create possibilities for more investment options.

    Budget 2019-20: Disappointment for Home Buyers

    However, there are some misses as well in the Union Budget 2019-20. Over 3 lakh home buyers who are stuck with unfinished projects for over a decade are the unhappy lot.

    These buyers were banking on the budget for the creation of a stressed asset fund to complete the projects. In fact, claiming that they have been disappointed by the Union budget, over 200 homebuyers under the umbrella body of Noida Extension Flat Owners Association (NEFOWA) launched a social media protest #NoHouseNoVote and #nohomenovote.

    “We were hopeful that the Union government would ration some amount to help agencies like the NBCC to complete the pending projects of Amrapali,” ET Realty quoted Abhishek Kumar, president, Nefowa, as saying.

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