Government Reintroduces Indexation Benefits in Real Estate: A Boon for Investors
Government allows indexation benefits in real estate, benefiting investors who purchased properties before July 23, 2024.
Real Estate InvestmentIndexation BenefitsLong Term Capital Gains TaxMutual FundsAmfiReal Estate NewsAug 08, 2024
This means that investors can choose to pay 20% on long-term capital gains (LTCG) after considering indexation or 12.5% on LTCG. The reintroduction of indexation benefits comes after the government had earlier withdrawn them in the recent budget, alongside reducing LTCG from 20% to 12.5%.
The industry had requested the government to reconsider the withdrawal of indexation benefits, leading to this latest amendment. The Association of Mutual Funds in India (AMFI) has also made a similar request to the finance minister to reconsider the withdrawal of indexation benefits in mutual funds.
For investors, this move is a welcome change. Indexation benefits allow investors to adjust the purchase price of a asset for inflation, reducing the tax liability on long-term capital gains. This can significantly reduce the tax burden on investors, making investments in real estate more attractive.
The reintroduction of indexation benefits is a positive step for the real estate sector, which has been facing challenges in recent times. It is expected to boost investor sentiment and encourage more investment in the sector.
In the past, indexation benefits have been a key consideration for investors in real estate. The ability to adjust the purchase price for inflation has helped reduce tax liabilities, making investments more attractive. The reintroduction of this benefit is likely to make real estate investments more appealing to investors.
The government's decision to reconsider the withdrawal of indexation benefits is a response to industry requests. It demonstrates the government's willingness to listen to industry concerns and make changes to support growth.
The impact of this move will be closely watched by investors and the industry. It is expected to have a positive impact on the real estate sector, encouraging more investment and growth.
Frequently Asked Questions
What is indexation benefit in real estate?
Indexation benefit allows investors to adjust the purchase price of a property for inflation, reducing the tax liability on long-term capital gains.
Who can avail indexation benefits in real estate?
Investors who purchased properties before July 23, 2024, can avail indexation benefits on long-term capital gains tax.
What are the tax implications of indexation benefits in real estate?
Investors can choose to pay 20% on long-term capital gains (LTCG) after considering indexation or 12.5% on LTCG.
Why was the indexation benefit reintroduced in real estate?
The government reintroduced indexation benefits in real estate after requests from the industry to reconsider the withdrawal of indexation benefits.
What is the impact of indexation benefits on the real estate sector?
The reintroduction of indexation benefits is expected to boost investor sentiment and encourage more investment in the real estate sector.
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