India's Real Estate Sector Faces Changes with Removal of Indexation Benefit
The latest Union Budget 2024 proposals aim to equalize asset classes, making real estate investments more attractive, but what does it mean for homeowners and investors?
Real EstateCapital GainsIndexation BenefitUnion Budget 2024Real Estate NewsJul 30, 2024
Welcoming the announcement, President of CREDAI-MCHI, Domnic Romell, said that the reduction in long-term capital gains tax from 20% to 12.5% is a commendable move, significantly simplifying tax calculations for the public. This move positions real estate investments on par with other financial assets, attracting younger investors to the real estate arena.
In Maharashtra, the three-year period for setting off stamp duty paid on the acquisition of flats will provide an additional advantage to new buyers. While this may have a slightly negative tax impact on those who purchased properties post-2001 and are selling now, the overall benefits for new investors and the real estate market are substantial.
Experts believe that the Union Budget 2024-25 has rationalized the long-term capital gains (LTCG) taxes across asset classes, bringing equity, debt, gold, and real estate on an equal footing. For property sellers, the impact of withdrawal of the indexation benefit on property sales has been tempered with a concurrent reduction in the LTCG tax rate from 20% to 12.5%.
Managing Director, Gera Developments, Rohit Gera said that the move to align long-term capital gain tax for real estate with other financial assets is a positive move and will make investment in real estate more attractive. However, eliminating indexation will hurt people who have long-term investments in real estate. Investors who have purchased homes recently or who purchase with a view to sell in a few years will be benefitted by the lower tax rate even though the indexation benefits have been withdrawn.
Information
NAREDCO (National Real Estate Development Council) is the apex body of real estate developers in India, representing the interests of the real estate sector.
CREDAI-MCHI (Confederation of Real Estate Developers' Associations of India - Maharashtra Chamber of Housing Industry) is the apex body of real estate developers in Maharashtra, promoting the interests of the real estate sector.
Gera Developments is a leading real estate development company in India, known for its innovative projects and commitment to quality.
Keywords real estate, capital gains, indexation benefit, Union Budget 2024, long-term capital gains tax, NAREDCO, CREDAI-MCHI, Gera Developments
Frequently Asked Questions
What is the indexation benefit in real estate?
The indexation benefit in real estate allows homeowners to adjust property prices for inflation, reducing their capital gains tax liability.
How will the removal of the indexation benefit affect property owners?
The removal of the indexation benefit will likely result in a higher tax burden upon sale for property owners who have held assets for more than 10 years.
What is the long-term capital gains tax rate for real estate?
The long-term capital gains tax rate for real estate has been reduced from 20% to 12.5% in the Union Budget 2024.
How will the changes in the Union Budget 2024 affect new investors in real estate?
New investors holding properties for more than two years will benefit from the lower long-term capital gains tax, making short and mid-term investments more attractive.
What is the impact of the changes on the real estate market?
The changes are likely to attract younger investors to the real estate arena and make real estate investments more attractive, but may have a slightly negative tax impact on those who purchased properties post-2001 and are selling now.
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