How the 2017 budget will impact the real estate sector in india?
Answers
Answered by
0
Affordable Housing Gets Infrastructure Status
The grant of infrastructure status to affordable housing– the backbone of the India’s real estate – will boost the growth of low cost housing in India. This is important because almost 95%[1] of the shortage in housing supply is in this segment.The infrastructure status will help developers of budget housing projects to:
take cheaper loans (say at 12% vs 18-24%)
launch more low cost housing projects (where most of the demand lies)
meet the government’s objective of Housing for All by 2022
How it will benefit the economy
Increase in housing activity will generate new employment opportunities
Construction industry will witness healthy growth
Tax incentives will reduce cost and improve profitability and efficiency
Regulatory breakthroughs such as RERA and GST will increase demand and streamline the real estate sector
What this means for you
Construction costs will come down
Tax concessions provided to developers will translate into a cost benefit for you
Increased flow of foreign and private capital (and debt) will boost construction activity
1-Year Tax Relief on Unsold Inventory
A 1-year tax break for ready, unsold housing inventory[2]will now be payable afteran entire project has been completed – and not before (as earlier). This will ease the financial burden on land owners, developers and realtors;prevent litigations– and ultimately stimulate growth.What this means for you
You will have more housing options to choose from
New housing projects will be launched faster
Change in Qualifying Area &Timeline Requirements
To qualify for 100% tax deduction on profitsfrom affordable housing projects,developers had to complete their project within 3 years – which was impractical because approvals are time-consuming.The completion time has now been increased to 5 years, thereby allowing developers more time to sell their inventory.
The qualifying size requirements have also been revised – from built-uparea to carpet area – as follows:
30 sq. m. for projects in municipal limits in the 4 metros[3]
60 sq. m for the rest of India[4]
The increase in area (from built-up to carpet)will incentivise moredevelopers to enter the affordable housing sector.
What this means for you
Increase in supply of low-cost housing projects
Increase in size of low-cost homes by approx. 30%[5]
Holding Period for Capital Gains Reduced
The long-term capitals gains tax for immovable property (i.e. land and building) can now be availed after 2 years, instead of 3 years. Additionally, the base year for indexation has shifted forward by 20 years – from April 1, 1981 to April 1, 2001 for all asset classes including immovable property.
What this means for you
You can buy property and exit much faster
You will pay less capital gains tax
The move also provides tax relief to developers of housing projects who have faced a slowdown in sales after demonetisation.
Joint Development Agreements (JDAs) Will Boost Land Transactions
JDAs, which are the most prevalent form of land development, will get a boost after the key tax reforms announced in the 2017 Budget. This is likely to increase the supply of land into the real estate market which has been facing pressure for the last 3 years.
What this means for you
More housing options in the future, especially in emerging areas
Focus on Improving Connectivity & Transportation Infrastructure
The government will focus aggressively onMultiple Mode Transport System(MMTS[6]) – by holistically merging local railand bus faresto allow commuters to enjoy both facilities.Additionally, infrastructure for transportation will receive a fillip to the tune of INR 2.41 lakh crore.
You can expect to see more housing projects being launched in peripheral locationswhere land is cheaper – because as connectivity improves, travel time will reduce and no longer be such a deterrent.
What this means for homebuyers like you
You will be able to buy a bigger house for less, especially in peripheral area
The grant of infrastructure status to affordable housing– the backbone of the India’s real estate – will boost the growth of low cost housing in India. This is important because almost 95%[1] of the shortage in housing supply is in this segment.The infrastructure status will help developers of budget housing projects to:
take cheaper loans (say at 12% vs 18-24%)
launch more low cost housing projects (where most of the demand lies)
meet the government’s objective of Housing for All by 2022
How it will benefit the economy
Increase in housing activity will generate new employment opportunities
Construction industry will witness healthy growth
Tax incentives will reduce cost and improve profitability and efficiency
Regulatory breakthroughs such as RERA and GST will increase demand and streamline the real estate sector
What this means for you
Construction costs will come down
Tax concessions provided to developers will translate into a cost benefit for you
Increased flow of foreign and private capital (and debt) will boost construction activity
1-Year Tax Relief on Unsold Inventory
A 1-year tax break for ready, unsold housing inventory[2]will now be payable afteran entire project has been completed – and not before (as earlier). This will ease the financial burden on land owners, developers and realtors;prevent litigations– and ultimately stimulate growth.What this means for you
You will have more housing options to choose from
New housing projects will be launched faster
Change in Qualifying Area &Timeline Requirements
To qualify for 100% tax deduction on profitsfrom affordable housing projects,developers had to complete their project within 3 years – which was impractical because approvals are time-consuming.The completion time has now been increased to 5 years, thereby allowing developers more time to sell their inventory.
The qualifying size requirements have also been revised – from built-uparea to carpet area – as follows:
30 sq. m. for projects in municipal limits in the 4 metros[3]
60 sq. m for the rest of India[4]
The increase in area (from built-up to carpet)will incentivise moredevelopers to enter the affordable housing sector.
What this means for you
Increase in supply of low-cost housing projects
Increase in size of low-cost homes by approx. 30%[5]
Holding Period for Capital Gains Reduced
The long-term capitals gains tax for immovable property (i.e. land and building) can now be availed after 2 years, instead of 3 years. Additionally, the base year for indexation has shifted forward by 20 years – from April 1, 1981 to April 1, 2001 for all asset classes including immovable property.
What this means for you
You can buy property and exit much faster
You will pay less capital gains tax
The move also provides tax relief to developers of housing projects who have faced a slowdown in sales after demonetisation.
Joint Development Agreements (JDAs) Will Boost Land Transactions
JDAs, which are the most prevalent form of land development, will get a boost after the key tax reforms announced in the 2017 Budget. This is likely to increase the supply of land into the real estate market which has been facing pressure for the last 3 years.
What this means for you
More housing options in the future, especially in emerging areas
Focus on Improving Connectivity & Transportation Infrastructure
The government will focus aggressively onMultiple Mode Transport System(MMTS[6]) – by holistically merging local railand bus faresto allow commuters to enjoy both facilities.Additionally, infrastructure for transportation will receive a fillip to the tune of INR 2.41 lakh crore.
You can expect to see more housing projects being launched in peripheral locationswhere land is cheaper – because as connectivity improves, travel time will reduce and no longer be such a deterrent.
What this means for homebuyers like you
You will be able to buy a bigger house for less, especially in peripheral area
Similar questions