No more tax exemption on the interest paid for those investing in real estate for rental income..This was a boon for those with high disposable income...The real estate is already down in primary market..This will accentuate the problems in secondary market too..Go for equity or other liquid investments
[h=1]Narendra Modi has made it extremely unappealing to be a landlord in India[/h]
Ramsurya Mamidenna
February 06, 2017
Budget 2017 has rolled out measures to encourage first-time home buyers, but by tweaking select provisions on tax reliefs, finance minister Arun Jaitley has ensured that real estate may no longer be an option to invest in.
The Narendra Modi government is set to club tax incentives for self-occupied properties by bringing them on par with rental houses. Under the new regime, the deduction limit on interest paid for home loans taken for houses that a buyer is already occupying, will be the same as for those bought with the intention of earning rental income.
Earlier, you could claim tax exemption on the interest paid, up to a limit of Rs2 lakh for self-occupying houses, while there was no such ceiling for houses bought for rental income. People who invested in real estate could book the loss they suffered on lower rent, which helped in reducing their overall taxable income.
The math goes like this: rental yield today is about 2-3% of the actual value of houses. Pitch this with the average home loan interest rate of 10-11%, and you have a loss of 8-9 percentage points, which investors made good till now by claiming tax deductions to that extent. With the budget looking to limit the tax exemption on interest for even rental homes to just Rs2 lakh, it will keep investors off the sector.
This will in turn push up supplies of homes in the secondary real estate market, the segment that includes resale units. A rise in the number of houses on sale will bring down prices that have already fallen by 30% post-demonetisation. “The new budget provision is a game changer for the worse.”
https://qz.com/903528/demonetisatio...remely-unappealing-to-be-a-landlord-in-india/
[h=1]Narendra Modi has made it extremely unappealing to be a landlord in India[/h]
Ramsurya Mamidenna
February 06, 2017
Budget 2017 has rolled out measures to encourage first-time home buyers, but by tweaking select provisions on tax reliefs, finance minister Arun Jaitley has ensured that real estate may no longer be an option to invest in.
The Narendra Modi government is set to club tax incentives for self-occupied properties by bringing them on par with rental houses. Under the new regime, the deduction limit on interest paid for home loans taken for houses that a buyer is already occupying, will be the same as for those bought with the intention of earning rental income.
Earlier, you could claim tax exemption on the interest paid, up to a limit of Rs2 lakh for self-occupying houses, while there was no such ceiling for houses bought for rental income. People who invested in real estate could book the loss they suffered on lower rent, which helped in reducing their overall taxable income.
The math goes like this: rental yield today is about 2-3% of the actual value of houses. Pitch this with the average home loan interest rate of 10-11%, and you have a loss of 8-9 percentage points, which investors made good till now by claiming tax deductions to that extent. With the budget looking to limit the tax exemption on interest for even rental homes to just Rs2 lakh, it will keep investors off the sector.
This will in turn push up supplies of homes in the secondary real estate market, the segment that includes resale units. A rise in the number of houses on sale will bring down prices that have already fallen by 30% post-demonetisation. “The new budget provision is a game changer for the worse.”
https://qz.com/903528/demonetisatio...remely-unappealing-to-be-a-landlord-in-india/