Mumbai Real Estate Market to Feel the Pinch as Budget 2024 Removes Indexation Benefits
The removal of indexation benefit on long-term capital gains may slow down property transactions in the Mumbai real estate market, say experts.
Budget 2024Real Estate MarketIndexation BenefitsCapital Gains TaxMumbai Real EstateReal Estate MaharashtraAug 05, 2024
According to experts, the Mumbai real estate market is primarily led by buyers who sell small units to upgrade to larger homes. This coupled with the performance of the stock market and the upcoming assembly elections in the state may lead to property transactions cooling off in Mumbai.
The Union Budget 2024-2025 proposals, announced by Finance Minister Nirmala Sitharaman, have removed the indexation benefit on sale of property, allowing homeowners to adjust their gains against inflation. This, say real estate experts, may lead to higher tax burden on real estate transactions and severely impact property sellers. The long-term capital gains (LTCG) has been reduced from 20% with indexation benefit to 12.5% without indexation for the real estate sector.
What is indexation? Indexation allows one to adjust the purchase price of an asset for inflation, reducing taxable profits and tax liabilities. Without this adjustment, individuals paying tax may have to pay increased taxes despite the lower LTCG rate.
According to real estate experts, removal of indexation will slow down sales in the secondary market, also known as resale market in metro cities, including the Mumbai real estate market.
Frequently Asked Questions
What is indexation benefit?
Indexation allows one to adjust the purchase price of an asset for inflation, reducing taxable profits and tax liabilities.
How will the removal of indexation benefit affect the Mumbai real estate market?
The removal of indexation benefit may slow down sales in the secondary market, also known as resale market in metro cities, including the Mumbai real estate market.
What is the expected impact on property sellers?
Property sellers may face higher tax burden on real estate transactions and may be severely impacted.
How will the performance of the Indian stock market affect real estate transactions?
Real estate transactions are also connected with the performance of the Indian stock market.
What is the expected impact on the mid-segment market in Mumbai?
The mid-segment market, specifically in the range of ₹2 to ₹5 crore might be impacted and even investors might put their decision to sell on hold.
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