Boost for first-time home buyers a welcome move, say realtors

By announcing an incentive of Rs 50,000 to first-time home buyers, the Central government has not just brought cheers to the reality sector but has also tried to make housing more affordable and viable in and around the Capital where industry has a large stake.

This additional deduction has been given on interest for loans up to Rs 35 lakh, provided the house value doesn’t exceed Rs 50 lakh which was much-awaited as the costs of housing units have increased much over the recent years. Notably, in the real estate sector, particularly the housing segment is facing a huge slowdown for the last 2-3 years, resulting in a huge delay in delivery of projects to customers and piling up of unsold inventories.

Union Finance minister Arun Jaitley has removed the last significant tax hurdle in the way of Real Estate Investment Trusts (REIT) which has been welcomed by the real estate body across Delhi-NCR. A homebuyer across the region is entitled to claim both the interest and principal components of home loan repayments for tax benefits. Currently interest payable on a ‘self-occupied’ house is subject to a maximum deduction of Rs 2 lakh under the head ‘Income from House Property’.

“Union Budget 2016 is comprehensive and well-rounded with some positive initiatives for the real estate sector. 100 per cent deduction for profits to an undertaking from a housing project for flats upto 30 sq metre in four metro cities and 60 sq metres in other cities will benefit developers in the low-cost housing space. Deduction for additional interest of Rs 50,000 per annum for loans up to Rs 35 lakh for houses under Rs 50 lakh will encourage low-end buyers to invest in property. 

Excise duty exemption on Ready Mix Concrete (RMC) will lower the cost for housing construction and in turn, encourage builders to pass on the benefits to homebuyers. Overall, we expected the Finance Minister to be more aggressive for the real estate sector during this budget regarding issues like industry status and single-window clearance,” said Prashant Solomon, Managing Director, Chintels India Ltd.