Tax incentive on second home misused, won’t extend it beyond Rs 2 lakh: Govt

Tax incentive on second home misused, won’t extend it beyond Rs 2 lakh: Govt

HIGHLIGHTS

  • The Finance Bill 2017 restricts set-off of loss towards second home against other heads of income up to Rs 2L under Sec 71 of the I-T Act
  • Currently, there is no such limit for set-off of loss from house property, which is mainly the difference between the rental income and interest on home loan

Representative image.

NEW DELHI: Ruling out rollback of the proposal to restrict tax incentive for second home+ to Rs 2 lakh per annum, revenue secretary Hasmukh Adhia on Saturday said there is no point in subsidising purchase of second property by those who have surplus funds.

Moreover, he added that the tax incentive for second home loan borrower is being “virtually misused.”

Citing limited resources, he said it is prudent to subsidize first-time buyer and not the second property owner who is not staying in that but earning income from the second unit.

The Finance Bill 2017+ has restricted set-off of loss towards second home against other heads of income up to Rs 2 lakh under Section 71 of the Income Tax Act.

Under the present dispensation, there is no such limit for set-off of loss from house property, which is mainly the difference between the rental income and interest on home loan. In other words, a buyer could deduct the entire net interest paid on the home loan.

“Government resources are very very limited. The question is should the government be subsidizing first-time home owners who are occupying own house or should the government be subsidising the second acquisition of the property by people who have got surplus money to invest in real estate,” Adhia said while addressing industry representatives here.

He cited an example: “If I have already my own house, I buy a new property by taking a bank loan of Rs 1 crore, the interest on it is Rs 10 lakh per annum and I rent it out to somebody who gives out Rs 3 lakh as rent, the remaining Rs 7 lakh you could offset against your salary income or business income.”

The loss to the government for the second house were almost one third of that, he said, adding that it came to about Rs 3 lakh in addition to Rs 2 lakh advantage.

“So, why should the government bear the cost of second house acquisition, that was the question. We have a lot of people to be given affordable housing, we need to help them out… so the revenue loss was huge and people were virtually misusing it,” he said.The Finance Bill, 2017, proposes to restrict such set-off of house property loss to Rs 2,00,000 per annum only. Balance loss, if any, will be carried forward to be set off against house property income of subsequent 8 years.
Hence, individual tax payers having loss of more than Rs 2,00,000 will now have a higher tax outgo.

 “In line with the international best practices, it is proposed to insert sub-section (3A) in the said section to provide that set-off of loss under the head ‘Income from house property’ against any other head of income shall be restricted to Rs 2 lakh for any assessment year,” the Finance Bill 2017 said.

“However, the unabsorbed loss shall be allowed to be carried forward for set-off in subsequent years in accordance with the existing provisions of the Act.”

Timesofindia

Infra status to boost low cost housing – Budget 2017

Builders will be eligible for tax and subsidy incentives, and institutional funding at affordable rates.

Union Finance Minister Arun Jaitley, in the Budget 2017-18, has proposed to grant ‘affordable housing’ the coveted infrastructure status to facilitate higher investment in the sector and, in turn, achieve the government’s ambitious goal of ‘Housing for All’.

The grant of infrastructure status would mean builders will be eligible for many government tax and subsidy incentives, and institutional funding at affordable rates for low cost homes.

The move has evoked mixed response from the sector. Tushad Dubash, Director, Duville Estates, said, “With the infrastructure status, the sector can look at funding through insurance companies, which is a huge alternate sector and opens up a new avenue for real estate funding.”

Issue of land cost

However, Rohit Gera, Managing Director, Gera Developments & Vice President, Confederation of Real Estate Developers’ Associations of India (Pune) said, “The infrastructure status will truly see a big impact only if these lower cost funds are actually made available for acquisition of land. Without this, a large part of the funds required for the affordable segment for the construction will be provided by the end consumer. Large scale capital is not required once the land acquisition is completed and approvals are in place.”

Pointing out that in his Budget proposals last year, he had announced a scheme for profit-linked income tax exemption for promoters of affordable housing scheme and that it had received a good response, Mr Jaitley said he intended to make this scheme more attractive.

In a bid to boost affordable housing, the Budget 2017-18 proposed to ease the condition of period of completion of the projects from current three years after commencement to five years. Besides, measurement norm of affordable housing has been amended to carpet area from built-up area — a move that will expand the area and make more projects eligible.

The Budget also proposes to modify the affordable housing scheme by stating that “instead of built up area of 30 and 60 sq.mtr., the carpet area of 30 and 60 sq.mtr. will be counted. Also the 30 sq.mtr. limit will apply only in case of municipal limits of four metropolitan cities, while for the rest of the country including in the peripheral areas of metros, limit of 60 sq.mtr. will apply.

Refinancing loans

The National Housing Bank will refinance individual housing loans of about ₹20,000 crore in 2017-18, Mr Jaitley said. He added, “Thanks to the surplus liquidity created by demonetisation, banks have already started reducing their lending rates, including those for housing. In addition, interest subvention for housing loans has also been announced by the Prime Minister.”

There are also tax sops for developers struggling with completed but unsold homes, estimated at around six lakh units in eight major cities. “At present, the houses which are unoccupied after getting completion certificates are subjected to tax on notional rental income. For builders for whom constructed buildings are stock-in-trade, I propose to apply this rule only after one year of the end of the year in which completion certificate is received so that they get some breathing time for liquidating their inventory,” Mr Jaitley said. He also proposed to make several changes in the capital gain taxation provisions in respect of land and building. “The holding period for considering gain from immovable property to be long term is three years now. This is proposed to be reduced to two years,” the Finance Minister said.

“Also, the base year for indexation is proposed to be shifted from April 1, 1981 to April 1, 2001 for all classes of assets including immovable property. This move will significantly reduce the capital gain tax liability while encouraging the mobility of assets,” he added.

The Hindu 

Top 10 expectations of real estate sector from Budget 2017

Developers have for long been demanding single window clearance to remove bureaucratic delays, which in turn delay delivery of homes.
Developers have for long been demanding single window clearance to remove bureaucratic delays, which in turn d… Read More
 Real estate industry has high expectation from the upcoming budget 2016-17. Stakeholders are demanding that central government gives relaxation in income tax rate, provide clarity on GST, raise House Rent Allowance (HRA) deduction and announce policies to standardize construction materials in order to uplift the real estate industry.

Take a look at some of the major expectations that stakeholders have from the upcoming Budget 2016-17:

Industry status
Directly or indirectly, the real estate sector contributes to over 15% of India’s GDP. It has been asking for industry status for quite some time now. In its absence, developers are forced to borrow at high interest rates and comply with a stringent evaluation process. Unavailability of funds at a reasonable rate of interest delays the construction process and increases the final cost of homes, negatively impacting the end consumer.

Giving industry status to the entire real estate sector, instead of granting infrastructure status only to the affordable housing segment, would help in pushing the housing demand in India.

Single window clearance
For the real estate sector to really grow and execute its projects on time, various government approvals should be given in a timely manner. Developers have for long been demanding single window clearance to remove bureaucratic delays, which in turn delay delivery of homes.

Clarity on beneficiaries under PMAY
The government recently announced that interest rates of 3% would be applicable on loans of up to Rs. 12 lakh and 4% on loans of up to Rs 9 lakh, under the Pradhan Mantri Awas Yojana (PMAY). Now, two new income categories can avail higher loans with interest subsidies. The Budget should give more clarity on the actual definition of beneficiaries who can avail of these benefits.

For example – would young urban professionals hoping to buy their own apartments but not belonging to either the EWS (Economically Weaker Section) or the LIG (Low Income Group) segments be allowed similar subventions? Also, affordable housing is largely available in the fringe areas of metros and tier-II, III cities. Would certain redevelopment projects within metros meeting the affordable housing definition be granted similar benefits?

Financial protection from project delays
The deduction on interest of self-occupied houses is capped at Rs 2 lakh. For under construction residential units, however, if the construction is completed after 3 years, then the deduction is just Rs 30,000. This 3-year period starts from the end of the year in which the loan was taken. Lately, there have been many delays in the completion of many housing projects beyond the 3-year period.

This has caused hardships to property buyers. To provide them some relief, the government may consider allowing interest deduction in such cases without the cap of Rs. 30,000, and from the year in which the possession was due to the buyer as per the terms of the agreement.

I-T sops for first-time home buyers
Can a first-time home buyer looking at an affordable project get additional income tax incentives for at least five years? The Budget should throw more light on this. Any efforts in this direction would help the government move closer to its objective of delivering ‘Housing for All by 2022’.

Also, given the lack of institutionalized rental housing in Indian cities, such a move could spur many fence-sitters into moving out from their rented apartments to owned homes. It could also encourage more developers to come up with products suiting these segments.

Simplified tax norms for REITs
We have not seen a single REIT listing till date because of the presence of multiple taxes. Until tax hurdles are removed for developers and asset holders, it is highly unlikely that we will see any REIT listing. The government should recognize the capacity of REITs to improve market conditions for the real estate sector and remove the policies constraining their growth. The government should look at:

Reduced level of taxation of REIT income
Waiver of capital gains for the developer at the time of transfer of property into REIT
Removal of service tax on lease premises

Higher tax saving on home loan & home insurance premiums
The government should increase the tax deduction limit for housing loans, especially for buyers in metropolitan cities. The current limit of Rs 2 lakh is insignificant, given the ticket sizes in cities like Mumbai where most houses are priced at Rs 1 crore and above. Also, tax concessions on house insurance premiums could be introduced to encourage end-users to insure their homes.

Similarly, the tax exemption limit should be increased by about Rs 1 lakh and be auto-set to match inflationary trends in a financial year.

Clarity on GST

While the goods and services tax (GST) tax structure has been announced, the real estate industry is waiting with bated breath to see which tax rate is applied to the real estate and construction industry. Clarification would also be needed on the abatement scheme, and whether credit for input tax would be allowed if the composition scheme has been availed by developers.

Raise house rent deduction limit

Salaried persons get house rent allowance (HRA) as a component of their total salary, and can therefore claim a deduction. This deduction can be substantial in cases where the salary and its HRA component are higher. However, self-employed persons and those who draw lump sum pays without an HRA component can only claim a maximum deduction of Rs 2,000 a month under Section 80GG. The Budget can and should address this anomaly.

Digitize all land records

Digitize all land records and registration process to make them easy to do and transparent.

TimesofIndia

A vintage elegance

 

 

The Victorian theme lends a grand look to the interiors of your home. For a sophisticated and classic look, opt for the Victorian theme for your home decor. This theme can be infused in several doses to impart opulence in layers in the various areas of the home.

The Victorian look can, at times, appear heavy because of a profusion of trimmings and fuss, but a contemporary twist can also make it suitable for modern living.

Design elements

You can begin with designing a stunning Victorian living room with arched windows and doorways, and double height French windows with heavy teak wood panelling. Keep the walls uncluttered. Instead of having a number of paintings, opt for a single one along with an antique wall clock, accentuating the look of the polished wood.

Tonal quality

Use rich, jewel-toned colours to accessorise, such as strong blues, deep reds and rich greens. Opt for floral prints for your wallpaper and for sofa upholstery.

Furniture flair

In the Victorian theme, furniture should be of mahogany or teak, with ornate carving and tables with marble tops. Use round or oval backs for your chairs.

Fabric factor

Even standard decorations are done in excess here, be it the fabrics reflecting elaborate patterns, walls covered with intricate and vibrant textures, large flowers in dark colours, or curtains the décor exudes extravagance that typified the era rich, heavy, and opulent.

Accent aura

Some of the characteristic features of this style are marble faux fireplaces, large chandeliers, heavy mirrors, stained glass and chinaware. These can be easily adapted to feature in a modern home.

Picture frames

Victorian picture frames are a great way to make the walls of your room look elegant. They can magically transform any corner. Victorian pictures frames are mostly of brass with varying finishes. Antique finish, copper finish and silver finish are some of the popular finishes for a frame.

Lampshades

Lampshades are elaborate, with brass and etched glass fittings. Glass featured elsewhere too in the form of decorative stained glass used as panels on front doors as well as for windows. Collections of antique dolls impart are very Victorian.

Chandeliers

Light up with Tiffany-style lamps, wrought iron or brass chandeliers and even heavy candelabra.

Living room

The living areas can have large vases with floral arrangements and plant stands with potted palms. Grecian busts and statues also go well with this theme.

Bedroom

For your bedroom, furnish it with huge pieces of furniture and beds with elaborate canopies or huge head and footboards. Opting for chests and almirahs that are large and ornately carved will complete the look.

Source: Times Property, The Times of India, Chennai

Demonetisation slows down Chennai real estate sales

This fourth quarter saw a slowdown in real estate sales in Chennai with a 55% drop in housing units sold year-over-year.
This fourth quarter saw a slowdown in real estate sales in Chennai with a 55% drop in housing units sold year-over-year.
CHENNAI: The fourth quarter of the calendar year is usually the most hectic time when it comes to real estate sales in Chennai. With the festive season, fat Diwali bonuses, the auspicious day of Dhanteras, real estate developers usually see a lot of prospective home buyers queuing up.

This fourth quarter, however, saw a massive slowdown in real estate sales in Chennai with a 55% drop in housing units sold year-over-year.

In Q4 of 2016, only 757 units were sold compared to 1,673 units in the same period the previous year. Number of project launches in the city fell to 58 from 93 in the year ago period.

“Demonetisation has definitely impacted sales in Chennai. The cash crunch along with cyclone Vardah were a downer when it came to people taking decisions on property,” said Sridhar Srinivasan, managing director, Chennai, Cushman & Wakefield.

However, this is part of an overall trend in Chennai real estate market, which got exacerbated with the cash ban. For instance, the fourth quarter of 2013 saw a high of 2,554 units being sold. After which there has been a decline to 1,629 units in 2014 to 1,673 in 2015.

However, Cushman & Wakefield expects the phenomena to be temporary and won’t last beyond the new two quarters.

As to the “cash” or “black money” component of real estate sales, Srinivasan said this has not impacted mid-segment sales. “Middle-level housing units have seen a high impact. The high-end and luxury segment, which use a higher component of cheque vs cash, saw lesser impact. We are expecting this trend to continue for the next two-three quarter,” he said.

Mid-level housing units saw a 21% dip to 662 units in the fourth quarter of 2016, compared to 840 sold units in the comparable quarter last year. High-end units, however, saw sales nearly double to 91 in Q4, from 49 in the year-ago.
Another reason as to why transactions are being hit is because of stamp duty and registration fee that need to be paid at offices. Given the role of the “cash” component in property deed clearances, demonetisation has definitely thrown a wrench in the works.
For the full-year, the number of projects in 2016 dipped 24% to 57 from 75 last year. The number of housing units also dipped 21% to 6,419 from 8,174.

Home loan to become cheapest in 6 years as banks slash rates

  1. SBI home loans up to Rs 75 lakh, earlier available at 9.1%, can now be taken at 8.6%
  2. The reduction in MCLR will mean that new borrowers will get loans at the cheaper rates
  3. Old borrowers will have to enter into a fresh contract with the bank (by paying a small fee) to get loans linked to MCLR

MUMBAI: Home loan rates have fallen to their lowest level in six years with the State Bank of India, the country’s largest lender, cutting the effective rate to 8.6% from 9.10%.

While the SBI cut its one-year marginal cost of lending rate (MCLR) — the benchmark to which home loans are linked — to 8%, against 8.9% earlier, it kept the spread above MCLR at 60 basis points, against 20 basis points earlier.

So, home loans up to Rs 75 lakh, earlier available at 9.1%, can now be taken at 8.6%. For others, the rate would be 8.65%, against 9.15% earlier. Besides SBI, the Union Bank of India and the Punjab National Bank also cut rates.

Private sector banks like ICICI Bank are expected to follow suit.

TOI had carried a frontpage report on January 1, saying the SBI and other banks were set to cut rates following a prod from PM Modi to signal that benefits of demonetisation in the form of record deposits are being shared with the poor and middle class.

The reduction in lending rates by several public sector banks will make the affordable home loan scheme, announced by PM Modi on Sunday, available at a little over 4% for borrowers seeking loans of up to Rs 9 lakh. Details of the scheme are yet to be announced.

The reduction in MCLR will mean that new borrowers will get loans at the cheaper rates. Since home loans are linked to one-year MCLR, the rates are locked in for 12 months.

Older loans will get the benefit of the new rates only after their one-year lock-in ends.

Those who had availed loans before April 2016 would have their EMIs linked to the earlier benchmark, the base rate. These borrowers will have to enter into a fresh contract with the bank (by paying a small fee) to get loans linked to MCLR.

SBI has also reintroduced a teaser rate loan, where loans will be available at 8.5% for the first two years and at a floating rate in subsequent years. These loans were discontinued five years ago after the RBI frowned on them.

Other banks which have announced lower rates with effect from the New Year include State Bank of Travancore, IDBI Bank and Indian Overseas Bank. Top officials of the SBI said that home loans would provide the bank with an alternative to parking funds in government bonds where the return is less than 7%.

Meanwhile, banks expect the interest subvention on loans for affordable homes and home extensions and small enterprises to counter the slowdown caused by monetary contraction following demonetisation.

The impact of the schemes is expected to be felt in lending and on the overall economy in the first quarter of FY18.

“Today, 45% of bank loans is going to only 300 companies. The extreme concentration of bank credit on the top end of the corporate sector has begun to border on the ridiculous,” said Rajiv Lall, MD & CEO, IDFC Bank.

He added that the announcements by the Prime Minister would help rebalance this by encouraging loans to small business where the framework has already been created with the help of payment systems and bank accounts.

Lall also welcomed the fact that the government was encouraging small lending through market related programmes as compared to the past when priority sector lending was in the form of a diktat.

“From our perspective this is extremely positive and will help us further in penetrating into the segments we serve. With these announcements, the challenges that all faced following demonetisation would clearly be history,” said Kapil Wadhawan, chairman and MD, Dewan Housing Finance Corporation.

According to Gagan Banga, vice chairman and MD, Indiabullls Housing Finance, subsidised home loans will find many takers as the EMI cheque will now be smaller than the rent cheque. “This is a tremendously positive announcement coming on the back of many directed steps to realise the ‘Housing for All’ objective,” said Banga.

Times of India Article mentions 360 Property Management Services Chennai

Article -The Times of India SEP 29 2016-1

 

Start-ups provide A-Z services for NRI home owners

September 29, 2016

 

article pic

Medium and Small Scale Constructions

Traditional decor scheme in your living spaces

 

 

Traditional design evokes images of understated elegance and the grandeur of the 18th and 19th centuries. Contemporary homes use just the right blend of tradition and modernity. Gone are the days when sleek furniture and stunning artifacts were signs of good taste and decor. If your home carries a contemporary theme with steel or designer sofas and trendy display objects and artifacts, a light touch-up with a few carved wood accessories can create a beautiful fusion of modern and traditional decor.

However, a proper blending is necessary to generate an artistic flavour and to avoid mismatching.

There are wonders you can do to your home if you have opted for a traditional decor scheme. Apart from accessories, intrinsically carved wood furniture can be a good object of decor.

Using carved wood is a great way to decorate. The very presence of it brings about an instant facelift, whether it is in the form of furniture or accessories. Fabrics in a traditional room are generally neither too shiny nor too textured. Gentle curves are seen in furniture, pillows, and accessories. The overall ambience of traditional decor is homey and understated.

Pairs of objects are usually arranged in balanced proportion. Antique paintings form an essential part of traditional interiors. Large statues carved out of wood or stone do not suit small, closed spaces and they must be coordinated with extreme care, lest they upset the visual balance.

Small delicate pieces are often lost when bunched together in one area. Place them artfully in twos and threes to create a fresh look.

Antiques should not be placed near large, open windows that bring in pollution, harsh light, and dust. This will tarnish and damage the piece.

Create an interesting corner with these ancient brass bells from south India. Add to their beauty by coordinating them with smaller artifacts.

When the home is designed in a traditional style, the artifacts must suit the character of the home decor. Brass lamps, heavy silks, portraits on walls, and carved furniture make a statement.

Rekha Kavoor, Times Property, The Times of India