Cheap houses are still cheap, but real estate doesn't have a real boost

The stagnant real estate market has little to encourage, except the extension of taxes on affordable housing.

The additional deduction of up to Rs 1.5 lakh for interest paid on loans taken for the purchase of affordable housing has been extended until March 31, 2021.

Currently, while taxing capital gains, commercial profits and other sources with respect to real estate transactions, if the value of the consideration is less than the circular rate by more than 5%, the difference is counted as income, both in the hands of buyer and seller. It is proposed to increase this limit to 10%.

The tax exemption on profits earned by builders who build affordable houses is also proposed to extend for one year.

Live plus Satish Magar, president of National, expressed disappointment. “The 2020 budget has not been encouraging for the real estate sector, which needs immediate attention. Unfortunately, none of the problems, such as the restructuring of one-time loans and the improvement of tax deductions on mortgage loans, have been addressed, except for the extension of a tax exemption for developers and the sanction of loans.

Niranjan Hiranandani, MD of Hiranandani Group, said: “Affordable housing remains the government’s favourite with previous tax exemptions for both homebuyers and developers being continued for one plus year. Commercial real estate segments may also witness a boost, with the focus on warehousing, data centres, schools, hospitals and hospitality.’’