Now that the Union Budget for 2017 is missing, what does this mean for the real estate sector? As a first buyer, if you invest in a luxury apartment? As a homeowner, should you store or sell? In this article, we delve into the pros and cons of the budget.
- Reduced storage period
Investors and homeowners have good reason to rejoice at the 2017-18 budget. But first, a little background. Short-term capital gains are taxed at 30 percent, and for long-term fixed assets - 20 percent. According to the latest policy, the shelf life of long-term assets, such as apartments and houses, was reduced to two years from a three-year period. This means that homeowners can now resell their properties within two years of their purchase and take advantage of the reduced tax burden of 20 percent. This can lead to more people leaving their homes, which will lead to an increase in supply and demand, which will be favorable for buyers. The new budget aims to revitalize the real estate sector by promoting mobility and ownership of assets.
- Provision of infrastructure status
The Minister of Finance proposed to offer affordable housing sites with the status of infrastructure. In order to qualify, houses will need to display a carpet area of 30 sq.m. and 60 square meters, and not built-up area. If you were waiting to buy a luxury apartment, now is the right time to take off for your dollar. As for the builders with the status of infrastructure, it will mean cheaper loans and better tax breaks. These benefits will flow to buyers who can purchase housing at more affordable prices for the first time. This is a significant step towards achieving a “Home for All”. mission.
- Base Year Redefined
The new budget determined the base year for indexing long-term assets, including land and buildings, in 2001 instead of 1981. This is good news for buyers. How? Previously, despite the large payment for the purchase of property, tax benefits could only be repaid at registered rates that were much lower than market rates. However, with this step, those who want to invest in real estate may now have higher tax benefits.
- Conditional lease
Now the tax will be levied on builders for any unsold apartments after a year of construction. Previously considered as stocks in the trade, the same will not be saved on unoccupied or unsold apartments. Given that only one residence is supported for self-employment, any unsold units will be considered rented and the corresponding tax must be paid by the developer. In an attempt to compensate for such accidents, perhaps the developers will try to get rid of these expensive luxury apartments in the near future, leaving buyers with a promising deal.
