Union Budget 2024: A Game-Changer for Real Estate Investors?
The removal of indexation benefit on real estate capital gains may have a mixed impact on property owners and investors in India.
Union Budget 2024Real EstateCapital GainsIndexation BenefitLong Term Capital Gains TaxReal EstateJul 30, 2024
Dr. Niranjan Hiranandani, Chairman of NAREDCO, stated that owners of heritage homes may face a higher tax burden upon sale, as the absence of indexation prevents adjusting the property's cost basis for inflation. However, he also pointed out that new investors holding properties for more than two years will benefit from the lower long-term capital gains tax, potentially making short and mid-term investments more attractive.
Domnic Romell, President of CREDAI-MCHI, welcomed the announcement, stating that the reduction in long-term capital gains tax from 20% to 12.5% is a commendable move that will simplify tax calculations for the public. He believes that this move will attract younger investors to the real estate arena and position housing as an attractive investment avenue.
Jayesh Rathod, Director of The Guardians Real Estate Advisory, noted that the Union Budget 2024-25 has rationalised the long-term capital gains taxes across asset classes, bringing equity, debt, gold, and real estate on an equal footing. While sellers may potentially face higher taxes, he believes that investors in real estate will reassess their investment strategies, and homebuyers and sellers will adapt to the new paradigm.
Rohit Gera, Managing Director, Gera Developments, stated that the move to align long-term capital gain tax for real estate with other financial assets is a positive move that will make investment in real estate more attractive. However, he also pointed out that eliminating indexation will hurt people who have long-term investments in real estate.
Information NAREDCO (National Real Estate Development Council) is a leading real estate industry body in India, and CREDAI-MCHI (Confederation of Real Estate Developers' Associations of India - Maharashtra Chamber of Housing Industry) is a prominent real estate developers' association in Maharashtra.
Gera Developments is a well-known real estate development company in India, and The Guardians Real Estate Advisory is a leading real estate advisory firm in India.
Frequently Asked Questions
What is the impact of removing indexation benefit on property owners?
Property owners who have held assets for more than 10 years may face a higher tax burden upon sale, as the absence of indexation prevents adjusting the property's cost basis for inflation.
Will the removal of indexation benefit 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, potentially making short and mid-term investments more attractive.
How will the reduction in long-term capital gains tax from 20% to 12.5% affect real estate investments?
The reduction in long-term capital gains tax will simplify tax calculations for the public and attract younger investors to the real estate arena, positioning housing as an attractive investment avenue.
What is the impact of rationalizing long-term capital gains taxes across asset classes?
The rationalization of long-term capital gains taxes across asset classes will bring equity, debt, gold, and real estate on an equal footing, and investors will reassess their investment strategies, and homebuyers and sellers will adapt to the new paradigm.
How will the elimination of indexation affect people who have long-term investments in real estate?
Eliminating indexation will hurt people who have long-term investments in real estate, as they will face a higher tax burden upon sale.
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