Budget 2025: Homebuyers Hope for Affordable Housing and Tax Relief
Homebuyers are eagerly awaiting the Union Budget 2025, hoping for reforms that enhance affordability, streamline regulations, and boost the real estate market sentiment.
Union Budget 2025Real EstateHomebuyersAffordable HousingTax ReliefReal EstateJan 30, 2025
High interest rates and taxation have been a significant burden, while rising inflation has dampened demand, especially in the mid and affordable housing segments.
This budget presents a crucial opportunity for both existing and prospective homebuyers seeking financial relief.
The real estate industry experts believe that well-planned policy measures could offer significant support to middle-class homebuyers while driving growth in the sector.
Here are some of the key expectations from Budget 2025
Affordable Housing and Simplification of GST
Strengthening initiatives like the Pradhan Mantri Awas Yojana (PMAY-U) with higher budgetary allocations and extending loan-linked subsidies could promote homeownership, especially for first-time buyers.
The current Goods and Services Tax (GST) framework poses challenges for developers due to ambiguities.
A more streamlined and transparent tax structure could reduce financial strain and encourage smoother transactions for under-construction properties.
Stamp Duty Rationalisation
Homebuyers in some states face stamp duties as high as 8-9%, which significantly increases property costs.
A uniform and reduced rate, particularly for homes priced up to Rs 1.50 crore, would make housing more affordable and stimulate demand.
Enhancing REITs and InvITs
Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) have improved sectoral transparency and liquidity.
Reducing the Dividend Distribution Tax (DDT) and offering additional incentives to retail investors could further drive their adoption.
Boost for Rental Housing
Rental housing in metro cities remains expensive and unaffordable.
Many migrants cannot afford rental housing close to their workplaces, leading to higher commuting costs and time.
Affordable rental housing could provide relief to these migrants and address urban housing shortages, promoting workforce mobility.
Higher Tax Deduction Limits for Home Loans
Homebuyers have long been seeking higher tax deduction limits for home loans.
Revisiting tax deduction limits under Sections 80C and 24(b) of the Income Tax Act could increase affordability.
Adhil Shetty, CEO of Bankbazaar.com, notes, “Currently, under Section 80C, a Rs 1.5 lakh deduction is allowed for home loan principal repayment.
For interest repayment, a Rs 2 lakh exemption is given for self-occupied properties.
Raising these limits would provide much-needed financial relief to homebuyers.”
Encouraging NRI Investments
Non-Resident Indians (NRIs) have shown growing interest in Indian real estate.
Easing investment norms and reducing tax burdens on property transactions could attract more foreign capital into the sector.
Single-Window Clearance for Projects
Developers have been advocating for a faster and more efficient approval process through a single-window system.
This would help developers complete projects on time, reduce costs, and attract both domestic and foreign investments.
Simplifying regulations and providing tax incentives for Foreign Direct Investment (FDI) in real estate would position India as a favorable global investment destination.
As the Union Budget 2025 unfolds, all eyes will be on it to reshape the real estate landscape, ensuring affordability, efficiency, and sustainable growth.
Frequently Asked Questions
What is the Pradhan Mantri Awas Yojana (PMAY-U)?
The Pradhan Mantri Awas Yojana (PMAY-U) is a government initiative aimed at providing affordable housing for all by 2022. It includes various schemes to support first-time homebuyers and low-income groups.
Why is stamp duty rationalisation important for homebuyers?
High stamp duties can significantly increase the cost of property for homebuyers. Rationalisation, especially for homes priced up to Rs 1.50 crore, would make housing more affordable and stimulate demand.
What are REITs and InvITs?
REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) are financial vehicles that allow investors to invest in real estate and infrastructure projects. They offer transparency and liquidity to the real estate sector.
Why is affordable rental housing crucial in metro cities?
Affordable rental housing is essential in metro cities as many migrants and low-income groups find it difficult to afford housing close to their workplaces, leading to higher commuting costs and time. It addresses urban housing shortages and promotes workforce mobility.
What changes do homebuyers expect in tax deduction limits for home loans?
Homebuyers hope for higher tax deduction limits under Sections 80C and 24(b) of the Income Tax Act. Increasing these limits would provide financial relief and make home loans more affordable.
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