Budget 2013: Will property become more affordable now?
This deduction will be over and above the deduction of Rs 1.5 lakh allowed for self-occupied properties under Section 24.
Mar 04, 2013
Source : The Economic Times


If you are still waiting to buy your first house, the budget has some good news for you. The finance minister has extended an additional benefit of Rs 1 lakh on home loans up to Rs 25 lakh for first time property buyers.

This deduction will be over and above the deduction of
Rs 1.5 lakh allowed for self-occupied properties under Section 24.

The catch, however, is that the property should not cost more than Rs 40 lakh. This rule means a large number of buyers in metro cities will not be eligible for the additional benefit.

"This would mostly be helpful for people who want to buy a house in smaller cities or distant suburbs where the ticket size is lower," says Niranjan Hiranandani, chairman of the Hiranandani Group.

How much tax can you save?

The additional deduction is not forever. It can be claimed over a maximum of two years—2013-14 and 2014-15. Given that interest rates on home loans today range between 9.5% and 11%, a buyer will be able to claim deduction for the entire interest. If you take a Rs 25 lakh loan for 20 years at 10% interest, you would have to pay about Rs 2.48 lakh as interest in the first year.

You can claim the entire amount as a deduction (Rs 1.5 lakh under Section 24 and the remaining under the additional deduction) in 2013-14. If your loan is smaller and you pay only Rs 2 lakh as interest, the remaining Rs 50,000 deduction can be availed of in 2014-15. While the cost of property is a barrier, a buyer can save between Rs 10,000 and Rs 30,000 a year depending on his income slab (see table).

Premium housing to cost more

Tax savings on home loans
Another announcement which would impact the real estate sector is the 1% tax deducted at source (TDS) on the transfer of immovable property with a market value of more than Rs 50 lakh.

Apart from the increase in transaction cost, this will add to the paperwork for buyers.

"A person would now need a TAN (Tax Deduction Account Number) to deduct tax on behalf of the central government. So once a buyer gets a TAN, only then can he purchase an immovable property. He is paying only 99% of the value to the seller and the balance 1% to the government," says PranayVakil, chairman, Praron Consultancy.

While the TDS will impact all property transactions, including resale property, new luxury projects will also cost more.

The rate of abatement on homes and flats of more than 2,000 square feet or costing Rs 1 crore and above has been reduced from 75% to 70%.

"Effectively, this translates into an increase in service tax outflow, which means that luxury housing will now become even more expensive," says Anuj Puri, chairman & country head, Jones Lang LaSalle India.


Latest Realty News

Too many loans for buying real estate can be risky
Mar 04, 2013
There is a worrisome trend today. People take loans to acquire properties - not just for home for self use, but for investment in home and land. The current thinking among most investors is that property is the only asset that will give good returns. One may wonder - what is so worrisome about this? The point is that investors are going in for multiple properties, in many cases liquidating most of what they have and taking a loan for the rest.
Real estate regulator may not monitor commercial projects
Mar 01, 2013
in a move that may bring relief to developers, the Ministry of Housing & Urban Poverty Alleviation has decided to keep commercial offices and shops/malls out of the purview of the Real Estate (Regulation & Development) Bill.
Budget 2013: No proposal to benefit real estate significantly.
Mar 01, 2013
For the real estate sector this budget didn't provide any proposals which could benefit the sector significantly. Additional interest deduction of Rs 1 lakh for low cost housing (where loan taken is less than Rs 25 lakh) in addition to the current deduction of Rs 1.5 lakh should be welcomed by the sector.
Budget sees mixed reaction from industry and business groups in Orissa
Mar 01, 2013
Bhubaneswar, Feb 28: Several industry and business organisations in the State Thursday showed mixed reaction to the Annual Budget 2013-14 presented by Finance Minister P Chidambaram, Thursday. While measures in the sectors of agriculture, rural development, education, health care and women empowerment were highly commended, little offerings to small and medium scale enterprises (SMSE) and failure of Government in controlling deficit financing were criticised.
Budget 2013: Luxury homes for the rich to become more expensive
Feb 28, 2013
MUMBAI/BANGALORE: Luxury homes for the rich would become more expensive after the finance minister today reduced the abatement on service tax availed by real estate developers for homes and flats above 2,000 sq ft or costing Rs 1 crore and above to 70% from 75% earlier.
Budget 2013: A boost for affordable housing says Gagan Banga, Indiabulls
Feb 28, 2013
"One has to compliment the Finance Minister, Mr P Chidambaram, for addressing the nation's priorities in his budget for 2013-14," said Gagan Banga, CEO, Indiabulls Financial Services Ltd, adding, "he has presented a realistic and balanced budget, which is a good beginning."
Housing prices rise by up to 9.6 pc in 18 major cities: NHB
Feb 27, 2013
NEW DELHI: Housing prices have risen in 18 major cities, including Delhi and Mumbai, by up to 9.6 per cent during October-December period 2012 compared with the previous quarter, according to National Housing Bank (NHB).
Economic Survey 2013: Delays in clearances jack up property prices by 40%
Feb 27, 2013
New Delhi: Property prices in India shoot up by 40 per cent due to delays in starting of projects, which require 34 procedures to get clearance, taking an average of over six months time and the issue needs to be addressed, according to the Economic Survey.
What will Budget 2013 hold for the real estate sector?
Feb 26, 2013
Will Budget 2013 give the Indian real estate market enough lift to help it kickstart a sagging economy? Historically around the world real estate and infrastructure are sectors that can add a lift to the economy when it stagnates.
Credai holds training programme for members
Feb 25, 2013
PUNE: More than 450 real estate developers participated in a two-day training programme which the Confederation of Real Estate Developers Associations of India (Credai), Maharashtra organized at Lavasa on Friday and Saturday. Members expressed their anxiety over negative policies of the government which delay completion of residential projects and add to the cost of homes.

Latest Realty News Of State

Realty Talk's