Get extra tax exemption on your first home loan

The Finance Bill 2016, which is expected to be approved by Parliament during the ongoing second half of the Budget session, provides for up to Rs 50,000 tax benefit on housing loans up to Rs 35 lakh taken for first residential property. The proposal aims to promote the government’s ‘housing for all’ scheme and strengthen the real estate sector which is facing a massive slowdown for last three-four years.

The Bill, which was presented by the FM Arun Jaitley read, “In furtherance of the goal of the Government of providing ‘housing for all’, it is proposed to incentivise first-home buyers availing home loans, by providing additional deduction in respect of interest on loan taken for residential house property from any financial institution up to Rs 50,000.”

After the Finance Bill is passed by Parliament, the amendments in this regard in the Income Tax Act will take effect from April 1, 2017. This incentive is proposed to be extended to a house property of a value less than Rs 50 lakh and a loan not exceeding Rs 35 lakh has been sanctioned during the period from April 1, 2016 to March 31, 2017.

, “the tax incentive will encourage first-time home buyers and increase the demand for housing significantly,” Realtors’ apex body CREDAI Getamber Anand said

The proposed deduction is over and above the limit of Rs 2 lakh provided for a self-occupied property under section 24 of the I-T Act.

Image Credits: DNA

From New Year, onwards it could become costlier to buy property near the Yamuna expressway as commercial property rates have been raised by 20 percent whereas; the allotment rates of residential and housing properties have been hiked by more than 10 percent and institutional and industrial property rates  have been hiked by 5 percent.

On Monday, in the joint board meeting of three major development authorities of Gautam Budh Nagar, the YEIDA (Yamuna Expressway Industrial Development Authority) passed a proposal to hike the allotment rates of land by 5 percent to 20 percent for commercial property, residential and housing properties and institutional and industrial properties and it will be come in effect from January 01, 2016.

As per the recommendations of YEIDA, the commercial property rates have been raised by 20 percent, whereas; the allotment rates for residential and housing properties have been hiked by 10 percent and institutional and industrial property rates have been hiked by 5 percent. Apart from that the Yamuna expressway region has also seen a hike by 5 percent in the allotment rats for recreation of green fields. In June 2014, the Yamuna Expressway Industrial Development Authority had also hike the land rates between 10 percent to 20 percent. However; as per the statement of Arunvir Singh, CEO of YEIDA, “The increase in price is just routine affair and we are used to do it at the starting of every years, but this time we are revising the rates after 20 months”. The more he added that the hike in the allotment rates is also crucial and it is crucial to consider the increase in land costs, inflation and more.

According to Arunvir Singh, the residential plots which are falling in the YEIDA region will be dearer by almost Rs 1,420 per sq m, whereas; all the commercial plots which are falling in the YEIDA region will be charged by Rs 5,680 extra. It is sure that commercial rates will go up by Rs 28,400 to Rs 34,080, however; while recreational greens will be allotted at Rs 5,355 per sq m as in comparison of Rs 5,100 per sq m which was previous. The more he added that it is decided to use the new land rates for mixed land as per new land rates. Apart from that YEIDA has also reduced the property transfer charges in order to provide relief to property owners as earlier it was 10 percent and now it is 5 percent. These charges are levied on transfer or sale of a plot from one owner to another owner. However; till September 2014, the transfer charges were 5 percent. Meanwhile; the real estate developers are trying to come up with the brave face and they are saying that it can draw an impact on the future booking as it could be more because any kind of land price hike makes an area no longer an affordable destination. With this much rise in the land price its difficult to sell properties.

In YEIDA region, hike could be more detrimental for the real estate market, as YEIDA region is developing area, as per the statement of Getamber Anand, president of CREDAI. As per one of the real estate developer, “Yamuna expressway region will not be affordable in coming days and it will leave negative impact on the middle and the upper middle class”.