Budget 2024: The Hidden Cost of Selling Your Old Property
Find out how the latest budget changes will impact your property sale and what it means for real estate investors.
Budget 2024Real EstateLong Term Capital GainsTaxationProperty OwnersReal Estate NewsJul 23, 2024
Industry experts are divided on the impact of this change, with some viewing it positively and others warning of a higher tax burden on property owners, particularly those who have held their properties for more than five years.
Housing.com and PropTiger.com Group CEO Dhruv Agarwala believes that the removal of the indexation benefit marks a significant shift for the sector, but could lead to a higher tax burden on real estate transactions. Palka Arora Chopra, Director at Master Capital Services Ltd, expressed concerns that the removal of indexation benefits might negatively impact investor returns and create a short-term bearish outlook for the real estate sector.
On the other hand, Amit Goyal, Managing Director of India Sotheby's International Realty, welcomed the reduction of the LTCG tax rate to 12.5%, believing it will encourage more liquidity in property transactions and align the long-term capital gains tax across different asset classes.
The removal of the indexation benefit means that property owners will no longer be able to adjust the purchase price of their property according to inflation. This could result in a higher taxable gain, leading to a higher tax burden.
Nilesh Sharma, President and Executive Director at SAMCO Securities, warned that the change could slow down the resale of residential properties and potentially increase the proportion of cash transactions in real estate deals, which could be counterproductive.
In conclusion, while the intention behind the budget changes may be to simplify the tax process, property owners should be prepared for a higher tax burden on their transactions. It is essential to understand the implications of these changes and plan accordingly.
Information
Housing.com and PropTiger.com are online real estate platforms that provide a range of services to property buyers and sellers. Master Capital Services Ltd is a financial services company that provides investment advisory services. India Sotheby's International Realty is a luxury real estate brokerage firm. SAMCO Securities is a financial services company that provides investment and trading services.
The Union Budget 2024-25 is an annual budget presented by the Government of India, outlining its revenue and expenditure plans for the upcoming financial year.
Frequently Asked Questions
What is the new LTCG tax rate for real estate sales?
The new LTCG tax rate for real estate sales is 12.5%.
What is the indexation benefit in real estate sales?
The indexation benefit allows property owners to adjust the purchase price of their property according to inflation, reducing their taxable gain.
How will the removal of the indexation benefit affect property owners?
The removal of the indexation benefit could lead to a higher tax burden on property owners, particularly those who have held their properties for more than five years.
Will the new tax rate encourage more liquidity in property transactions?
Yes, according to some experts, the reduction of the LTCG tax rate to 12.5% could encourage more liquidity in property transactions.
What is the impact of the budget changes on the real estate sector?
The impact of the budget changes on the real estate sector is mixed, with some experts viewing it positively and others warning of a higher tax burden on property owners and a potential slowdown in the resale of residential properties.
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