The new union budget seems to bring a new wave of sentiment for the prospective home buyers. As announced by the Finance Minister Nirmala Sitharaman on 5th July, 2019, the government has proposed an additional tax deduction of up to Rs 1.50 lakh on interest paid on home loans up to March 31, 2020 for purchase of an affordable house valued up to Rs 45 lakh. She further added in her speech that it will be in addition to the existing interest deduction of Rs 2 lakh.
With this latest amendment, you can see the sentiments of the home buyers improving. The demand for affordable housing is expected to grow significantly after this as middle class buyers can get a great benefit of around Rs 7 lakh over their loan period of 15 years. It makes the best time for those who were planning to buy their own houses.
The Finance minister has also taken an initiative of increasing the limit of carpet area from 30 square meters to 60 square meters in metropolitan regions and from 60 square meters to 90 square meters in non-metropolitan regions. This step has been taken in interest to align the definition of affordable housing in the Income-tax Act with GST Act. Apart from all these measures, the government been actively involved in promoting ‘Affordable Housing and Housing for all’ by giving a tax holiday on profits earned by developers of affordable housing. The holding period for calculating long-term gain on immovable property was reduced from 36 months to 24 months.
Affordable housing has been driving the real estate sector since long. All these measures taken by the government has undoubtedly brought real estate up the curve by changing the dynamics of affordable housing. But it still has a long way to go.
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