Housing for All by 2022 is a major objective of the Central Government and the 2017 Union Budget did contain several provisions for giving a boost to the real estate sector. Homebuyers will have several expectations from the Union Budget 2018. These provisions will make it ideal-
- Increase in limit of Rs. 2 lakhs (housing loss set-off)- The Finance Act of 2017 limited the loss from house property (set off against other earnings) to a total of Rs. 2 lakhs. House property exceeding Rs. 2 lakhs have to be carried forward and accordingly adjusted against future rental incomes. For example, in case interest paid for home loans post setting off income from rentals is Rs. 3 lakhs, the loss of Rs. 2 lakh can be adjusted against other incomes and the Rs. 1 lakh in balance will be carried forward for setting off against income over any of the next 8 years. Increasing this limit to Rs. 3 lakhs annually will be a good move as far as homebuyers are concerned.
- Added pre-construction interest deductions- The interest payable on housing loans for the duration for which a home is being constructed, can easily be claimed as a deduction. This can be claimed in 5 equal installments starting from the financial year in which there is completion of the property. However, most buyers do not get the deduction since this amount comes within the Rs. 2 lakh limit fixed for deductions on housing loan interest. Homebuyers want deductions for pre-construction interest to be permitted in the year of making payment or a separate deduction limit over and above the limit of Rs. 2 lakh annually.
- Delay in property construction- Interest deductions for housing loans can be increased to Rs. 2 lakh in place of Rs. 30, 000 in case construction of property is finished within 5 years from the ending of the financial year in which one has taken a loan. There long-term capital gains exemption under Sections 54 and 54F in case sales proceeds are invested for building a residential house within a period of 3 years. In case construction lags or is delayed by the developer, this benefit could be lost out. This should be highlighted and the duration should be relaxed accordingly.
- First time buyer incentives- Section 80EE has added deductions for first time homebuyers to the tune of Rs. 50, 000 for home loans between 1st April, 2016 and 31st March, 2017. This should be given to homebuyers with loans taken after this period as well. This is only valid if the property value does not exceed Rs. 50 lakhs. People buying properties in Tier 1 Indian cities where property values mostly exceed this limit, do not gain much as well. There should be first time incentives taking into account the location and size of the home.