From home loan tax benefits to stamp duty refunds, here’s what buyers expect from Budget 2022

The Modi government is striving to provide “housing for all” by 2022. However, this still seems like a distant dream as the Covid-19 pandemic has not only affected in the past two years almost all industries – including real estate succession – difficult, but also compounded the woes of the common man, including home buyers.

Although the demand for housing has increased in recent months due to improved buyer sentiment, low interest rates, a thirst for larger homes, various initiatives undertaken by the government and the advent of working from home in the post-Covid world, however, with the current state of real estate in mind and in an effort to reinvigorate buyer sentiment, a lot needs to be done.

Homebuyers are therefore looking to the 2022 budget with great hope. Here are some of their main expectations:

Increase the ceiling for the interest deduction on mortgages

Under Section 24 of the Income Tax Act 1961, a purchaser can claim a deduction up to a maximum of Rs 2 lakh for interest on the loan taken out for the acquisition/construction of property. an independent house property. “In view of rising interest rates and real estate, an increase of the said exemption to at least Rs 5 lakh per annum in the next budget can give much needed boost to the residential segment, mainly in the middle segment or luxury, and high-end markets such as MMR, etc. says Chintan Patel, Partner and Head – Real Estate, Building & Construction, KPMG India.

Separate provision for the deduction of repayment of principal on home loans

A separate annual deduction of Rs 1.5 to Rs 2.0 lakh for repayment of principal (other than Section 80C) could help give an additional boost to residential sales across India and also help buyers to reduce their tax burden.

“With construction costs and house prices high, the 2022 budget can be a way for the government to make it more profitable for homebuyers. The maximum principal repayment limit for tax refunds should be increased from the current Rs 2 lakh to a higher limit or should be classified as a separate provision in the tax refund. This will help reduce the financial burden on buyers and generate healthy housing demand, especially in the affordable housing segment,” said Atul Monga, co-founder of BASIC Home Loan.

Extension of Section 80EEE benefit for first-time home buyers: additional tax benefit for interest on affordable home loans

The additional tax deduction of Rs 1.5 lakh for interest, which is currently available for home loans sanctioned until March 31, 2022, can be extended for a period of 2 years until March 31, 2024.

“The limit of Rs 45 lakh for affordable housing is lower, given the higher property prices in the metropolitan cities of Delhi, Mumbai, Bengaluru, etc. As a result, the tax advantage is not used by many and the expectation is to revise the said limit upwards in the next budget. A geographic revision of ticket sizes could contribute to sustainable demand in cities in this segment and help account for price differences between markets,” Patel informs.

Some industry experts say that property prices have risen, the price range of property to be classified as affordable should be increased from the current Rs 45 lakh to something in the range of Rs 60 lakh to Rs 75 lakh.

GST Input Tax Credit Review

With rising construction costs in major housing markets in India, the provision of an input tax credit on existing GST rates for properties under construction will provide some relief to developers and users. final.

REITs: reduction of the holding period

Reducing the holding period for REIT shares from three years to one year will help reduce capital gains tax for retail investors. This will help increase retail investor participation in the REIT investment vehicle and improve liquidity for sponsors.

Offer stamp duty rebates in all states

To offer homebuyers a small sigh of relief in Covid, many states such as Karnataka and Maharashtra have reduced their stamp fees from 5% to 2% in 2021. This step has led to a positive outcome as there are has had an increase in home sales and at the same time, developers have managed to attract small buyers.

“With the intention of attracting more home buyers in the coming years, it is expected that the government will realize the need for stamp duty rebates in all states to stimulate demand for housing,” Monga said.

Clarity on tax breaks for properties under construction

With no express mechanism under computer law to arrive at the date of acquisition of a home property, this has been a contentious issue over the years, particularly for properties under construction. The reference can be taken from court precedents with different interpretations on the date of acquisition of the property, i.e. either the date of possession, the registration of the property, the date of majority payment, etc. To simplify, it may be appropriate to provide specific provisions within the framework of the Law. arrive at the date of acquisition to avoid any ambiguity.

Also, a homebuyer can claim a long-term capital gains exemption if they invest the capital gains/proceeds from the sale of a property/other long-term asset to buy /build another property within specified time frame. However, this exemption is not available if construction is completed beyond three years.

“This condition potentially penalizes a homebuyer for reasons beyond their control as there could be a delay in construction for various reasons. It can therefore be envisaged to extend this period to 5 years (similar to a deduction of interest on the capital borrowed in the case of buildings constructed) or to provide for an exemption even in the event of completion of the construction beyond 3 years, as also held by various case law,” says Parizad Sirwalla, Partner and Head, Global Mobility Services-Tax, KPMG in India.